Basic Instinct

Keith Gordon considers a case which addresses the question as to whether a receipt is capital or revenue in nature 

A few years ago, the CIOT/ATT London Branch annual dinner had as its guest speaker Lord Justice Carnwath (now Lord Carnwath of Notting Hill). His entertaining talk reminded those present that much of tax law treats issues as if they were as distinct as chalk and cheese, whereas in real life the differences between them are in fact quite subtle and barely imperceptible to anyone who does not see everything though a tax prism. One such example was the distinction between different kinds of receipt or expenditure – and whether they are revenue or capital in nature.

The recent decision of the First-tier Tribunal in Thornton v HMRC [2016] UKFTT 767 (TC) considers this distinction in the context of a landlord’s receipt from a departing tenant.