Upper Tribunal Tax and Chancery Chamber

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

Fecha: 22-Ene-2025

Construction of the Langford Contract

Construction of the Langford Contract

137.

Mr Simpson also submitted that the FTT had misconstrued the authorities when interpreting the Langford Contract, for the same reasons as set out above in relation to Formwise.

138.

The situation has a number of similarities with the Formwise contract, but there are some significant differences. As before, we start with the language of the contract. The Langford Contract itself is a Deed of Charge for a Secured Loan of £69,000, the security being a charge over the “Assets”. There are a number of clearly defined terms:

(1)

The “Assets” are defined as those “referred to in the Schedule (including without limitation the Intellectual Property)…”

(2)

The Schedule simply lists “Domain Name – lpengines.com”.

(3)

However, the “Intellectual Property” is defined as “any and all of the Goodwill/Domain Names and including all and any improvements thereto”.

(4)

The “Domain Names” are defined as “the domain names set out in the Schedule”.

(5)

“Goodwill” is defined as “the goodwill of the Borrower in relation to the Intellectual Property”.

(6)

The “Borrower” is Langford Performance Engineering Limited i.e. the operating company of the business.

139.

Although there is an element of circularity in the definitions of Goodwill and Intellectual Property, they are not completely circular because ‘Intellectual Property’ expressly includes the domain name(s).

140.

In this instance, it is plain that the IP in question is the domain name plus associated goodwill i.e. the goodwill generated by the use of the domain name. That goodwill can only have been generated via the website accessible at the domain name.

141.

The valuation from Pinstripe underpinning this Deed was “for the intellectual property rights attaching to the domain name (www.lpengines.com) and related website....” It was stated to be “A fair market value of the domain name and associated website…” and was “considered to be £78,000”. That valuation was based on the trading performance of Langfords and could only have been justified, in our view, on the basis that it included some or all of the goodwill of the business.