Reprisal for Mis-Sold Bank Product Is Taxable, UK Court Says (1)

Compensation received by two individuals from banks for mis-sold financial instruments used in their property rental business should be taxed as business income, a UK court ruled.

Payments received by brothers Simon and Edward Hackett to compensate for losses they incurred were taxable income rather than a “lost opportunity cost,” as claimed by the taxpayers, according to a decision of the Upper-Tier Tribunal dated Jan. 26 and published Wednesday.

“A lost opportunity cost is a theoretical cost which is not an accounting entry,” the tribunal said while dismissing the appeal made by the two individuals. “Opportunity costs are a concept ...