Upper Tribunal considers meaning of “disposal” and “asset”

Hardy v HMRC (2016) 30 TRU 06 4, [2016] UK UT 332 (TCC), 19 July 2016

Capital Gains Tax (CGT) is charged on gains arising when there is a disposal of an asset. Alternatively, a taxpayer may claim relief against chargeable gains when the disposal of an asset gives rise to an allowable loss. The questions of what is an ‘asset’ and what is a ‘disposal’ were examined by the Upper Tribunal in this case, where the taxpayer unsuccessfully sought to claim an allowable loss from the forfeiture of the deposit he had paid when he entered into a contract to purchase or property, but failed to complete the purchase. The taxpayer argued that the taxpayer’s rights under the contract amounted to an ‘asset’, which was ‘disposed’ of when it ceased to exist as a result of the rescission of the contract (s.(1) Taxation of Chargeable Gains Act (TCGA) 1992).