In the recent case of Snell v HMRC, relief claimed under s253 TCGA (which gives relief where individuals have made loans to traders and those loans have become irrecoverable) was denied. This case concerned a husband and wife (Mr and Mrs Snell). An amount of £2.3 million was loaned from Mr Snell’s bank account to a company (P). However, it was argued by the taxpayers that this was in fact not a loan from Mr Snell alone but comprised of a loan from him of £1.525 million and a loan from his wife of £775k. Mrs Snell subsequently claimed s253 relief on the £775k loan when the loan became irrecoverable. HMRC resisted the claim on the grounds that they considered the full £2.3 million to have been a loan from Mr Snell.
The burden of proof was on Mrs Snell to show that indeed £775k of the £2.3 million was in fact a loan from her. The FTT held that: ‘The onus of proof lies on Mrs Snell and the standard of proof is the balance of probabilities. We have concluded, for the reasons set out below, that Mrs Snell has not discharged that burden of proof and so her appeal must fail.’
The main obstacle for Mrs Snell is that the FTT found that there was no clear proof that the £775k was hers to lend and that the evidence that was presented was ‘confused and, in some places, contradictory’. This case, therefore, is a good illustration of why keeping contemporaneous records of transactions, even between husband and wife, is so important.
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