[2025] UKUT 00005 (TCC)

The FTT concluded at [48] that the incorporation of the company, entry into a lease agreement and employment of a head teacher were all steps which it took which were preparatory to any contract to acquire the goodwill of the appellant’s business. It is argued the FTT erred in law because there was no evidence for this finding.

It is also argued the conclusion was also inconsistent with a) the FTT’s finding that there was never any written or oral agreement between the appellant and the company for the acquisition of the goodwill, and b) the evidence on the reasons why the steps were taken by the company as opposed to by the appellant personally.

This challenge is in essence another way of attacking the FTT’s conclusion that an agreement amounting to a contract had not been reached by the relevant date. As indicated in my refusal of permission on the papers there was evidence for the conclusion the various matters were preparatory acts to the conclusion of the contract. This was all the evidence advanced by the appellant in relation to which the FTT then made a number of findings of fact at 11(1) to (45) setting out the chronology of events at all the relevant junctures. On the basis of that it concluded no agreement on the critical matters of price and price determination had been reached. That coupled with the agreed fact that a disposal had taken place meant the FTTs’ conclusion the acts were acts preparatory to any contract was one it was clearly entitled to reach.

Given it was agreed there was a disposal of some kind there was also nothing inconsistent with a finding the acts were preparatory to any contract and the finding there was no written or oral agreement between the appellant and the company for the acquisition of goodwill. The acts could be preparatory to an agreement that arose otherwise than orally or in writing e.g. by conduct.

Mr Downey suggested the acts were better viewed as preparatory to the actual disposal rather than to a contract (i.e. the contract to transfer on the appellant’s case having already been made) but again that simply another way of challenging the FTT’s conclusion that rejecting the appellant’s case a contract was made before 3 December 2014, a conclusion that was, as discussed, open to the FTT on the evidence.

There was also no necessary inconsistency between the appellant’s reasons advanced for things being done in the name of the company and a conclusion no agreement had been reached by the relevant time. None of the explanations put forward by Mr Downey based on the history to the negotiations with the church in relation to nursery premises and the intentions regarding incorporation of the business required a conclusion that a contract had been reached by 3 December 2014. The FTT explained why steps such as incorporation, entering into a lease and employing a head teacher did not show a contract had been made: planning consent to use the property as a nursery was awaited, as was the outcome of the OFSTED registration. The FTT explained (at [11(27)]) the significance of the lease having a break clause and the extension of the appellant’s personal licenses as enabling the appellant to keep her options open until she had certainty she could transfer the business to a company who would then be able to operate it. And as mentioned there was, the FTT noted, crucially a lack of agreement of price /a price determination mechanism.

Reflecting his arguments on misapplication of the burden of proof under Ground 2, Mr Downey criticised the FTT for not making findings identifying the contract that underpinned HMRC’s case on tax chargeability. But as discussed under that ground the FTT was correct to identify that the burden lay on the appellant to establish a contract had been made before the relevant date. It was not necessary for the FTT to make findings of fact on the matters underpinning HMRC’s closure notice in order to determine the case.