Zim Properties Ltd v Procter [1985] 58 TC 371

The taxpayer company contracted to sell some properties for £175k.

The contract was not completed because the company was unable to show a good title to one of the properties; in consequence, the purchaser repudiated the contract.

The taxpayer company took the view that the repudiation was the result of negligence on the part of the firm of solicitors who were acting for it in respect of the sale, and it issued a writ claiming damages against the solicitors totaling £104,138.

• The action was compromised by the solicitors.

Held, a right to bring an action to seek to enforce a claim that was neither frivolous nor vexatious, which right could be turned to account by negotiating a compromise yielding a capital sum, constituted an 'asset' for the purposes of the capital gains tax legislation.