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Q. In early 2020 I entered into an agreement to purchase the leasehold of a commercial property that was under construction in exchange for a premium of £400,000. The agreement stated that a 15% deposit was to be paid plus a 10% stage payment 12 months later with the balance on completion. Unfortunately, my business folded because of the pandemic, and I defaulted on the later stage payment. This was deemed to be a breach of the agreement, the contract was never completed, and the builder kept the deposit. Can I claim a capital tax loss in respect of the lost deposit?
A: Unfortunately, not - a capital loss can only be claimed when there is a disposal, or deemed disposal, of a chargeable asset. In this case, the terms of the contract were not adhered to, so you could not take possession of the underlying asset so no loss can be claimed.
The information provided in this blog is for general informational purposes only and should not be considered professional advice. As far as we are aware, the content is accurate at time of publication. Torgersens assumes no responsibility for errors or omissions in the content or for any actions taken based on the information provided.
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