TC09562 - [2025] UKFTT 00762 (TC)

Fecha: 23-May-2025

The Accounts

The Accounts

39.

The CPW 2008 Accounts related to the financial year of CPW immediately prior to the financial year in which the Agreements took effect. They:

(1)

referred in the directors’ report to the fact that “all employees are kept informed of issues affecting the company through formal and informal meetings and through the company’s internal magazine”; and

(2)

described CPWs turnover as comprising “revenue generated from the sale of mobile communication products and services, commission receivable on sales less provision for promotional offers and network operator performance penalties, ongoing revenue (share of customer airtime spend, and customer revenue and retention bonuses) and insurance premiums”.

40.

The CPW 2009 Accounts related to the financial year of CPW in which the Agreements took effect. They:

(1)

recorded (at note 13) that CPW had made a loss of £31,594,000 on the disposal to BBUK of the “former trade and assets” of the Vendor Companies on 25 June 2008;

(2)

made no mention in the directors’ report of any change to the business carried on by CPW;

(3)

made the same reference to CPW’s relationship with its employee as that set out in paragraph 39(1) above;

(4)

showed CPW as receiving 95% of the gross revenues of the Businesses and as continuing to incur 100% of the expenses of the Businesses; and

(5)

did not describe any of CPW’s turnover as being attributable to the provision of management services but instead described CPW’s turnover in exactly the same terms as those set out in paragraph 39(2) above.

41.

The BBUK 2009 Accounts related to the financial year of BBUK in which the Agreements took effect. They recorded that:

(1)

on 25 June 2008, BBUK had “acquired the right to carry on four businesses from [CPW], together with the associated goodwill thereon”;

(2)

BBUK had received turnover of £11,000,000 – described as “intercompany managed services income” – which was equal to the payments that the company was entitled to receive from CPW under clause 5 of the MSA over the relevant period – amounts equal to the part of the gross revenues of the Businesses that exceeded CPW’s management fee;

(3)

BBUK’s only expenses were interest payable to group undertakings of £1,954,000 and goodwill amortisation of £7,533,000; and

(4)

over the period, BBUK had had no employees and none of its directors had received any remuneration;

42.

The BBUK 2010 Accounts recorded that:

(1)

BBUK had received turnover of £12,389,000 – described in exactly the same manner as that set out in paragraph 41(2) above;

(2)

BBUK’s only expenses were interest payable to group undertakings of £1,196,000 and goodwill amortisation of £10,700,000;

(3)

over the period, BBUK had had no employees and none of its directors had received any remuneration; and

(4)

the outstanding loan from CPW carried interest at LIBOR plus 3.75%.

43.

Each of the BBUK Remaining Accounts adopted the same format as the BBUK 2009 Accounts and the BBUK 2010 Accounts:

(1)

in showing as turnover the payments which the company was entitled to receive from CPW under clause 5 of the MSA over the relevant period – amounts equal to the part of the gross revenues of the Businesses that exceeded CPW’s management fee; and

(2)

in showing interest payable to group undertakings and goodwill amortisation as the company’s only expenses

and, with the exception of the BBUK 2011 Accounts – where the relevant page had been accidentally omitted from the bundle but which can safely be assumed to have taken the form of each of the other BBUK Accounts – each of the BBUK Remaining Accounts adopted precisely the same description of the company’s turnover as had the BBUK 2009 Accounts and the BBUK 2010 Accounts.

The Correspondence