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10 April 2018
Issue: 4642 / Categories: Tax cases

Conegate Ltd (TC6340)

Reacquisition of shares at undervalue

S was director and sole shareholder of Conegate Ltd an investment company that owns 50% of WHH the ultimate parent of West Ham Utd Football Club. S wished to raise funds for the club and on the advice of his lawyers Conegate bought ordinary shares for £2m in WHH. Those shares were converted into deferred shares and then repurchased by WHH at a lower price. Conegate claimed a capital loss.

HMRC refused the claim. This was on the basis that the value shifting provisions in TCGA 1992 s 29 applied. Alternatively it argued that the transaction should be treated as taking place at market value (s 17) or that one of the purposes of the arrangement was to secure a tax advantage (s 16A). The taxpayer appealed.

The First-tier Tribunal said the taxpayer could not show that the market...

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