N Gray v HMRC

In N Gray v HMRC [2019] UKFTT 393 (18 June 2019) the FTT found that the costs of litigation initiated by an aggrieved minority shareholder against the majority shareholder were not deductible for CGT purposes.

Mr Gray had acquired a minority shareholding in a British Virgin Islands (BVI) company in 2003. In 2011 he had started legal proceedings against the majority shareholder under the relevant BVI provisions but an out of court settlement had been reached. As part of the settlement Mr Gray had sold his shareholding to the majority shareholder and received over $4.6m. He wished to deduct the litigation costs from the capital gain arising from the sale and contended that they fell within TCGA 1992 s 38(1)(b) on the basis that the litigation had related to the rights attaching to his shares (voting rights income rights...