Linslade Post Office & General Store v HMRC

In Linslade Post Office & General Store v HMRC (TC02136 – 30 July) two brothers operated a small shop in partnership. Their sister (R) began High Court proceedings claiming that she was also a partner. The High Court dismissed the claim. The partnership claimed a deduction for the cost of defending the proceedings. HMRC rejected the claim on the basis that it was capital expenditure and related to a partnership dispute. The First-tier Tribunal allowed the partnership’s appeal specifically distinguishing C Connelly & Co v Wilbey [1992] STC 783 (which HMRC had cited as an authority) on the grounds that that case related to a dispute between two partners whereas in the present case the court had found that R had never been a partner. Judge Kempster observed that the High Court proceedings had been ‘a failed claim by an outsider (R) against the assets...