O'Donnell v Revenue and Customs (CAPITAL GAINS TAX � Computation of gain)

CAPITAL GAINS TAX � Computation of gain � allowable expenses, order of application of relief under s 222, deductibility of loss on mortgage finance.

Mr O�Donnell appeals against amendments to his self-assessment for 2008/9. These amendments incorporated a capital gain on the disposal of four houses. He also appeals against a penalty.

�Mr James O'Donnell, and his father Tony O'Donnell gave oral evidence. Mr James O'Donnell produced a statement. There was a bundle of documents and a further supplementary bundle. These documents consisted principally of correspondence between the parties and documents produced by Mr O'Donnell in that correspondence. We should say that we found Mr O'Donnell a clear, measured, helpful and articulate presenter and witness. We find as follows.

At the beginning of 2008 Mr O'Donnell owned a number of properties. Among them were 2 Assarts Lane (where his parents lived, his grandparents had lived and where, at certain times after his acquisition of it, he lived) and three houses in Woodstock Road, Worcester. He had purchased these properties with the benefit of a loan from Singer and Friedlander (which at some stage was replaced as lender by Kleinwort Benson). This loan was secured by a charge over the four properties.

The nature of Mr O'Donnell's liability under the loan was unusual. The loan, we understand, was drawn down in Sterling but the liability could be, or be treated as, redenominated in, or translated into, any one or two of seven major currencies at intervals (with changes often taking place at intervals of about a week or less). The redenomination was managed by The ECU Group plc with some form of consultation with Mr O�Donnell. Interest was calculated by reference to the prevailing interest rates for the currency or currencies in which the loan was treated as denominated from time to time.