The taxpayer’s appeal was dismissed in Mahmood v HMRC  UKFTT 114 (TC).
CAPITAL GAINS TAX – whether transaction rescinded on the basis of common mistake so that no disposal had taken place – validity of closure notice – whether appellant’s tax return amended by HMRC to reflect the amendments contained in the closure notice – HMRC request to reduce the amount of gains identified in the closure notice – amount of inaccuracy penalty charged under Schedule 24 Finance Act 2008 – appeal dismissed.
As the FTT commented:
“It is not open to Mr Mahmood and RKP to rescind the transfer of the properties by Mr Mahmood to RKP in November 2016 on the basis that they were mistaken as to the tax consequences of the transfer so that the transfer is therefore void.
Whilst the transfer may have been reversed by the transfer of the properties back to Mr Mahmood, this does not have the result that the original transfer can be treated as if it had not taken place. That transfer did therefore constitute a disposal by Mr Mahmood for capital gains tax purposes and, as accepted by Mr Mahmood, is treated as having taken place for a consideration equal to the market value of the properties.”
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Written for accountants and other tax advisers at an intermediate level, Capital Gains Tax is built firmly on a foundation of statutory rules and case law principles. It is illustrated throughout with practical examples, and most chapters include a summary of pitfalls and planning points.