Sale of business was fraudulent

Sale of business was fraudulent

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Client purchases internet business and trades for 12 months incurring trading losses. He is then contacted by police and informed that the vendor of the business has been arrested for fraudulently selling to numerous purchasers, a business which he did not in fact own. My client has therefore had to cease trading.

Will there be any restrictions on claiming trading losses and capital losses against other income and gains due to the client not having good title to the business

Barry Smith

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By User deleted
06th Jun 2007 14:41

Two questions here
1} Can client claim relief for losses which he incurred in conducting a trade? Answer-why not, whether he was legally entitled to conduct the trade or not..

2]Can Client claim CGT loss on money paid out to fraudsman? Answer. yes, because what he acquired was a 'chose in action', that is a right to acquire something - an asset on the sale of which CGT would be payable, so the loss will be allowable.

In answering 1]have assumed that it was not shares in a body corporate which the client thought he was acquiring, in which cas answer is more complex.

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