C2.207 Preservation of title
On the disposal of an asset, the person making the disposal is entitled to deduct any expenditure wholly and exclusively incurred by him in establishing, preserving or defending his title to, or to a right over, the asset1. It should be noted that, in contrast to the provisions relating to expenditure on acquisition (C2.202) or enhancement (see C2.206) of assets, those relating to expenditure on preserving the disponor's title to the asset do not extend to expenditure incurred on behalf of the person making the disposal.
In Lloyd-Webber2 the taxpayers decided to purchase two Villas in a proposed development in Barbados and entered into contracts (the 2007 contracts) with the vendors. The villas were never completed and the 2007 Contracts were terminated. In return for giving up any rights under the 2007 Contracts, the taxpayers received rights under separate 2011 Contracts. They claimed capital loss relief for the cost of the rights given up, arguing that amounts paid under the 2007 Contracts were paid to acquire or enhance their contractual rights and allowable as a deduction under TCGA 1992, s 38. HMRC argued that the payments were made to acquire/enhance the estates in land which were the ultimate subject matter of the 2007 Contracts. The First-tier Tribunal found that although the taxpayers entered into the 2007 Contracts with the intention of ultimately acquiring completed villas, the payments they made under those contracts were for the acquisition of contractual rights, the only asset they actually acquired and a
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