Income Tax Relief on Subscriber shares but insolvent balance sheet

Good afternoon

Client has transferred his shares to a fellow director for no consideration. I am happy that this is the market value of the shares.

He has subscribed for the shares over a number of years, firstly on incorporation and then 2-3 years later when the company needed to raise some money.

I am content that he can get relief under s131 ITA 2007 for the original subscription but then 2-3 years down the line, the company balance sheet is insolvent, so in my mind the shares are worthless when he subscribes for them. I appreciate that he has a monetary loss but I'm not sure that the further subscriptions are allowable for capital losses in this case.

I seem to remember having this argument with HMRC some years ago but my superior tells me to this is an allowable loss.

Any help would be appreciated.