CGT relief on damages on breach of contract

CGT relief on damages on breach of contract

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A client agreed to buy a property from a third party at above market value. (He did this because he wished to sell his house, but the purchaser could only complete if he sold his own house which was likewise dependent on his buyer being able to sell etc, and towards the bottom of the chain the purchaser couldn't sell his house for the amount he wanted, so my client agreed to buy this property for £250k with the intention of selling it, potentially at a loss later on. The situation has now arisen that this seller has received an offer of £220,000 and my client has agreed to pay £30,000 as damages for breach of contract, and wants to use this as a capital loss to set off against other gains. My thoughts are that this shouldn't be allowable, and that to utilise the capital loss, my client would need to go ahead and buy the property for £250k and sell it on for £220k.

Any thoughts?

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