UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

Ballards operates in the home removals business in the East Midlands. It established a SSAS, called the Ballards Removals Pension Scheme. On 8 June 2010, Ballards signed an agreement with its SSAS under which it received £145,000 through the sale and leaseback of its domain name and website [223].

Ballards owned vehicles on which its logo was painted; it also operated a franchise agreement with another firm, Bishops Move Ltd [73], those vehicles being branded with the Bishops Move logo.

On 14 July 2011, a valuation of the Ballards trademark (logo) was carried out by Savile based on the post-tax profit of the company for the previous four years, together with projections for the next three years. The forecasts relied on were provided by Ballards and were based on “hope for growth” [89].

Savile concluded that the value of the trademark “could be anything between £98,030 and nil. Savile then averaged the seven years’ earnings to arrive at a figure of £36,332, which was rounded down to £35,000 [175]. The following day, and as a result of the Pension Funding Deal, Ballards filed an application to register the trademark.

On 19 July 2011, Ballards entered into a loan agreement with its SSAS on the security of the trademark, under which it borrowed £32,000 (“the First Loan”). The trademark was registered on 21 October 2011.

In September 2012 [175], a second valuation of the trademark was carried out by David Kelly of Seabright & Co (Nailsea) Ltd, another accountant. He had no experience of valuing IP assets prior to this engagement [185]. At the time, Ballards was moving into new business areas, namely military contracts and the moving of aggregates [73].

Mr Kelly applied what he described as the “market approach” to valuation, relying on the “rule of thumb”, taking 50% of Ballard's 2012 turnover as his starting point, and then applying a discount to provide a value for the trademark on a stand-alone basis. He had not seen Ballard's business plan and was not aware of any previous funding deals undertaken by Ballards [186]-[187]. Mr Kelly concluded that the trademark was worth £73,000 [105].

On 27 September 2012, Ballards entered into a second loan agreement with the SSAS (“the Second Loan”), the agreement stated that the SSAS was lending Ballards £48,956 [55] secured on the trademark. On that date, the principal outstanding on the First Loan was £24,956, so the difference was £24,000 [56].

The FTT found at [56]-[58] that:

Both those findings were challenged before us as Grounds 2 and 4 respectively, and we return to them later in our decision.

The FTT also held that MLT had failed to consider whether consolidating the First Loan with the Second Loan had caused two of the five key tests in s 179 to be breached [208]. Before us, it was common ground that there had been a breach, because:

At the time of the Second Loan, the Ballards SSAS held assets valued at £200,000 and the pension funding was £194,000 (£145,000 + £48,956), almost 100% of the total value of the fund [223].