Not issued

The taxpayer invested in a language college in 2004. He was a director but took no part in running the establishment. His wife held the only share and was company secretary.

By January 2007 the taxpayer was concerned about the financial situation. The board of directors recommended a programme of action that not acted upon. It included that the taxpayer as chairman subscribe for 99 new ordinary shares. The college went into voluntary liquidation at the end of the month.

The taxpayer claimed relief under TA 1988 s 574 in respect of losses for subscribed shares in 2005/06 and 2006/07. HMRC refused the claim and the taxpayer appealed in relation to 2006/07.

The First-tier Tribunal noted that certain conditions had to be fulfilled for losses to be allowed under s 574. They included that the taxpayer had to have subscribed for shares in a qualifying...