More evidence required

The taxpayers were directors of Vickers a wholly owned subsidiary of Rolls-Royce. The latter wished to dispose of its subsidiary and after the intervention of some venture capitalists managed to do so in 2005.

As part of the deal the taxpayers would cease to be employed by Rolls-Royce or any of its subsidiaries but become directors of the merged business. In addition they would be paid a bonus and have to acquire shares in the business. They paid for the shares by cheque after they had received their bonuses.

The taxpayers claimed that the Vickers’ business was effectively merged with the venture capitalists and they believed that they were required to acquire shares in what was a new company.

However the new company subsequently went into administration and the shares became valueless.

The taxpayers claimed relief in respect of shares that had...