The Court of Appeal (consisting of Donnelly J, Faherty J and Butler J) considered cross-appeals from a High Court judgment. In summary, the taxpayer had in 2004 entered into transactions with connected parties whereby a bond was sold subject to an option agreement. The overall result of the transactions was that a significant tax loss (for CGT purposes) was purportedly created owing to the operation of the connected-party rules (in particular, s549 TCA 1997), in respect of which relief was then claimed under s31 TCA 1997, even though no corresponding commercial loss had been suffered. Revenue challenged the taxpayer’s claiming of that loss and sought to use s811 TCA 1997 (the general anti-avoidance rule, or GAAR) to reverse it.
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