UT (Tax & Chancery) UT-2024-000113 - [2025] UKUT 00165 (TCC)

the claim does not have to be made in the return (paragraph 2(2));

Schedule 1B creates a separate and specific regime in which a claim that falls within paragraph 2 is treated as a standalone claim – in HMRC’s terminology a “free-standing credit” – which although it affects the amount of tax actually paid in the earlier tax year is dealt with separately from the return for that year. It is HMRC’s case that Mr Murphy’s claim for the tax year 2005/6 falls within that regime.”

As the FTT also observed: “Section 574 ICTA was repealed with effect from 5 April 2007. For the tax year 2007/8 onwards, the provisions governing share loss relief, including section 574 ICTA, were rewritten as part of the Tax Law Rewrite Project and incorporated in the Income Tax Act 2007 (“ITA”). They are now found in chapter 6 Part 4 ITA (principally, sections 131 to 133 ITA).”

S.131 ITA is the first of three sections under Chapter 6, dealing with “Share loss relief against general income”. S.131 provides that an individual is eligible for share loss relief if he incurs “an allowable loss for capital gains tax purposes” on the disposal of any “qualifying shares” in “any tax year”, defined as “the year of the loss”. “Qualifying shares” include shares in a “qualifying trading company”, the conditions for which are set out in sections 134 to 143.

S.132 ITA provides so far as relevant:

“Entitlement to claim

(1)

An individual who is eligible for share loss relief may make a claim for the loss to be deducted in calculating the individual’s net income –

(a)

for the year of the loss,

for the previous tax year, or