Alpine dispute

Method of calculating capital gain of asset bought and sold using Swiss francs

In 1988 the taxpayers bought a property in Switzerland using Swiss francs and sold it in January 2010 in the same currency. They failed to declare the gain in their 2009-10 tax returns but did so in 2013 using the Liechtenstein disclosure facility (LDF).

The method of calculating the gain was in dispute. The taxpayers said the gain should be determined in Swiss francs and then converted into sterling (method A). HMRC argued that the purchase price expenses and proceeds should each be converted into sterling using the exchange rate prevailing on the respective dates and then the sterling gain calculated (method B).

The parties also disagreed about the penalty rate. The taxpayers said it should be 10% in accordance with the LDF but HMRC set it at 20%.

The taxpayers appealed.