TC09562 - [2025] UKFTT 00762 (TC)

the purpose of the letter agreement was to clarify the intentions of the parties to the MSA;

paragraph 1 specified that that intention was that BBUK should be entitled to the majority of the benefits arising from the operations of the Businesses and that this was reflected in the management charge. At the same time, CPW should not incur an accounting loss for any financial year as a result of fulfilling its obligations under the MSA – except where actions or agreements regarding other operations of CPW had resulted in such a loss arising in the Businesses or material one–off items during the period had significantly reduced the profitability of the Businesses – and that, should CPW incur such a loss, the parties reserved the right to renegotiate the management charge accordingly;

paragraph 2 provided that, in the event that CPW became insolvent, BBUK would assume the management of the Businesses and fulfil all of the Businesses’ obligations “including but not limited to payroll and rental costs”;

paragraph 3 provided that CPW would request BBUK’s prior approval regarding any major strategic decisions in relation to the Businesses, including, but not limited to, cessation of the Businesses and significant changes in the operations of the Businesses; and

paragraph 4 provided that, in accordance with the clause in the MSA which provided for the management charge to be adjusted by mutual agreement and paragraph 1 of the letter agreement, the parties agreed to vary the management charge with effect from 1 July 2008 to 91.19% of all revenue generated by the Business. For this purpose “revenue” was defined as “the difference between all profits generated by the Businesses less all costs incurred by CPW in running the Businesses”.