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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Debt on a security: W T Ramsay Ltd v CIR


The Ramsay case involved a company which had incurred an agreed gain on the sale of a farm. It then entered into an avoidance scheme designed to produce an allowable loss to set off against the gain. The scheme removed value from a chargeable asset (shares) to produce an allowable loss on their disposal. The value passed into a loan, known as L2. This loan was also disposed of. If L2 was not a debt on a security, it would not be a chargeable asset. Therefore the gain on the disposal of the loan would not have been chargeable. However, the House of Lords held that the loan L2 did amount to a debt on a security. The gain on the disposal of L2 was thus a chargeable gain and the scheme failed.