HMRC’s concern that taxpayers should not obtain fiscal advantages which do not reflect the real economic result of their transactions contrasts with its eagerness to pursue the collection of tax even where the tax system fails to recognise taxpayers’ economic losses. In three recent cases on the CGT treatment of lost deposits, Hardy, Lloyd-Webber and Drake, HMRC, in order to maximise its revenue, attempted to exploit, successfully in two of the cases, the failure of the relevant CGT legislation to reflect economic reality.
In Issue XXIX of the Rudge Revenue Review, we examine these decisions in an article entitled ‘Original Difficulties’ and specify the legislative changes required to correct both this anomaly and a more fundamental defect in the CGT legislation which has existed since CGT was introduced in 1965.
