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Fraudulent claim

01 September 2014
Issue: 4467 / Categories: Tax cases , fraud , Business , Capital allowances , Capital Gains , Investments , Land & property , Losses

F Swain, H Swain, Clarisa Ltd (TC3896)

A company bought four properties from one of its directors. The firm sold one of the buildings in 2007 said expenditure of £360 000 had been incurred on all four properties and claimed a proportion of the amount against the disposal proceeds – which resulted in a capital loss of £41 175.

HMRC questioned the expenses discovering that the sum had been incurred much earlier in the company’s ownership of the properties and covered improvements and refurbishment.

The department said much of the expenditure would have been handled as revenue expenses and set against taxable rent while the rest would not be deductible in a capital gains tax computation. The taxman imposed a penalty.

The First-tier Tribunal agreed with the Revenue finding it “absolutely clear that no expenditure remotely totalling £360 000 had been incurred in 2007”.

The director had been unable to account accurately...

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