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Mansworth (HM Inspector of Taxes) v. Jelley – Court of Appeal

This appeal concerned the interaction of s.17 (market value rule), s.28 (timing rule) and s.144(3) (single transaction rule on the exercise of options) Taxation of Chargeable Gains Act 1992. The taxpayer had been granted share options as a result of his employment outside the United Kingdom and had later exercised those options when he became United Kingdom resident. The issue was whether, as the Revenue said, the taxpayer’s base cost should be the market value of the option at the time of the grant plus the amount actually paid for the exercise of the option (which gave a lower base cost) or, as the taxpayer argued, the market value of the shares at the time that the option was granted. The Court of Appeal, upholding the High Court and Special Commissoners, said that the taxpayer’s arguments were correct.

Tmothy Brennan QC and Hugh McKay appeared for the Appellant

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