TC09562 - [2025] UKFTT 00762 (TC)

Mr Gammie submitted that, even if BBUK had not acquired the Goodwill in law or in equity after the Agreements became effective, CPW no longer retained the Goodwill at that stage because, by virtue of its obligations under the Agreements, it could no longer turn the Goodwill to account. Once the Agreements became effective, CPW retained the right to receive a management charge based on a fixed percentage of the future gross revenues of the Businesses but it lost the ability to benefit from the future profits of the Businesses or to dispose of the Businesses or the Goodwill to someone else in the future. Consequently, CPW should be treated as having surrendered its rights in the Goodwill by entering into the Agreements and thus as not being the owner of the Goodwill at the point when it left the CPW Chargeable Gains Group – see O’Brien v Benson’s Hosiery (Holdings) Limited [1979] STC 735 (“O’Brien”).

Mr Brinsmead–Stockham said that the decision in O’Brien was not relevant in this case for a number of reasons. First, it was not concerned with goodwill but with an employment contract. Secondly, the issue in O’Brien was whether an employment contract could be an asset for the purposes of corporation tax on chargeable gains. It was held that it could be. However, in this case, it was common ground that goodwill was an asset for the purposes of corporation tax on chargeable gains. Finally, and most importantly, in O’Brien, the asset in question – the employment contract – had been surrendered in return for a payment whereas, in this case, CPW continued to own the Goodwill after the Agreements became effective. It had not surrendered its rights to the Goodwill and it could still turn those rights to account.