Mansworth v Jelley - the background

HMRC have changed their policy on losses created following a sale of shares acquired as an employee prior to April 2003. Although it seems a highly technical point the implications for clients affected could be huge. We have over 30 clients affected by this change of opinion. HMRC now say that there was no loss created when those shares were sold - so that potentially clients could have to change their tax returns.

There are significant issues as to how far HMRC can make the law - and then change it retrospectively. They would argue that they are not making the law - merely interpreting it - but that is contrary to other areas of guidance where you can receive a penalty for ignoring HMRC published advice when you make your return. They can argue that you have failed to take proper care.

Your position could be

1 You have claimed losses already and paid less tax as a result. Are you required to repay that tax?

2 You are about to submit a return for 2008/09 in which you will declare a gain - but one that is covered by a loss claimed in the past under the old interpretation of Mansworth which was claimed in the past and that claim has not been challenged

3 As in 2 but you have never actually claimed your loss - you just intended to make the claim when you had a gain

4 You have losses which have been claimed but not yet utilised - will they be available in the future?

5 You have made a claim to use the loss in a year which is still in the course of an enquiry.

Your tax position may vary depending which circumstances apply.