[2025] UKUT 00005 (TCC)

The FTT was wrong to determine the appeal by recourse to burden of proof rather than properly considering the case on the facts and determining the sole legal issue that arose in the appeal. The FTT could and should have been able to establish on the evidence before it what conduct gave rise to the necessary implied contract and when that contract was made.

The FTT misdirected itself as to the applicable burden of proof on the appellant. This was to show HMRC’s refusal of claim for Entrepreneur’s Relief on the disposal was wrong, not to prove that there was such a contract. The burden lay on HMRC to prove the facts it alleged in refusing the appellant’s claim.

The FTT erred in law in determining that the relevant contract for the purposes of s28 TCGA had to be unconditional or legally enforceable.

The FTT failed to focus on the conduct from which the necessary contract had to be implied instead focussing on whether the conduct justified the implication of a term of sufficient certainty to make the contract enforceable.

The FTT was wrong to apply legal principles as to whether there was a valid contract as there was no issue between the parties on this.

The FTT’s conclusion that i) the incorporation of the company, ii) the entry into a lease of premises and iii) the agreement to employ a Head Teacher, were all steps preparatory to a contract to acquire the goodwill of the business, was not supported by any evidence. 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.

The FTT failed to properly consider the totality of the appellant’s case. The FTT’s decision to dismiss the appeal was perverse in the absence of any positive case being advanced by HMRC as to the contract disposal date together with the lack of evidence to support the dates HMRC relied on in their rejection of claim.