Check first, pay later

The taxpayer had shares in a company that ceased trading in October 2004. HMRC accepted that the company was a qualifying trading company for the purposes of share loss relief under TA 1988 s 574(1).

After receiving advice from his tax office the taxpayer submitted a tax return for 2004/05 with supplementary pages for employment income and capital gains tax together with a copy of help sheet IR286 income tax losses for shares. He claimed to have the capital loss of £76 698 set against his income. HMRC made a repayment before checking the return.

The taxpayer subsequently amended his 2005/06 return setting the balance of the loss against his income for that year.

Despite the claim being legally inadmissible as s 574 only allows losses to be relieved against income for the...