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Valid election

13 July 2009
Issue: 4214 / Categories: Tax cases , Capital Gains
Adams (TC48)

In May 1999 an unquoted company in which the appellant was the majority shareholder was sold to C in exchange for cash and shares.

The appellant’s tax advisers had earlier applied for capital gains tax clearance under TCGA 1992 s 182 disclosing the earn-out rights.

Clearance was granted but restricted to the question of whether the conditions of s 137(1) were satisfied.

The appellant’s tax return for the year was submitted by a different tax adviser.

It included a computation of proceeds received of £1 661 716 cash £553 907 in shares and deferred consideration of £913 572. The capital gain was based on the cash element alone.

HMRC did not enquire into the return. However an enquiry was made into the taxpayer’s 2002/03 return in which he had included the disposal of...

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