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My client exercised non-approved share options in 1999-2000 and 2001-02 and incurred losses of £950 000 calculated in accordance with Mansworth v Jelley and the 2003 Revenue guidance.
These losses were included in amended tax returns and have been shown as carried forward. HMRC has not raised enquiries into these losses.
A capital gain was realised in 2018-19 sufficient to absorb the losses brought forward and in view of the amount I need to be sure about whether those losses will be allowed.
My thoughts are that HMRC will issue an enquiry when the tax return is submitted claiming the losses brought forward. I expect that HMRC will rely on the decision in Hutchinson [2017] STC 2048 on the basis that in 2018-19 my client should have known the Revenue’s view that the losses would not be allowable.
I should be grateful for readers’ views and any arguments that might be made in support of the loss claim.
Query...
