UT (Tax & Chancery) UT-2023-000031 - [2024] UKUT 00168 (TCC)

Paragraph 4(1), Schedule 13, FA 1996, as was then in force, stated that references to a “transfer” are reference to “any transfer of the security by way of sale, exchange, gift or otherwise”.

Paragraph 14A of Schedule 13, FA 1996, as in force at the relevant time, permitted claims to loss relief where a person “sustain[ed] a loss...from the discount on a strip,” and read as follows:

“(1)

A person who sustains a loss in any year of assessment from the discount on a strip shall be entitled to relief from income tax on an amount of his income for that year equal to the amount of the loss.

(2)

The relief is due only if the person makes a claim before the end of twelve months from the 31st January following that year.

(3)

For the purposes of this paragraph a person sustains a loss from the discount on a strip where—

(a)

he transfers the strip or becomes entitled, as the person holding it, to any payment on its redemption, and

(b)

the amount paid by him for the strip exceeds the amount payable on the transfer or redemption (no account being taken of any costs incurred in connection with the transfer or redemption of the strip or its acquisition).

The loss shall be taken to be equal to the amount of the excess, and to be sustained in the year of assessment in which the transfer or redemption takes place.

(4)

In sub-paragraph (3) above the reference to a transfer in paragraph (a) includes a reference to a deemed transfer under paragraph 14(4) above (and paragraph (b) shall be read accordingly).

(5)

This paragraph does not apply in the case of—

(a)

any transfer of a strip for the time being held under a settlement the trustees of which are not resident in the United Kingdom, or

(b)

any redemption of a strip which is so held immediately before its redemption.”

(emphasis added)