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

As set out at §80(1), Gannon sold certain IP to its SSAS for £25,000, and leased it back. The IP had three parts: a trademark, being a headshot of Mr Gannon himself and a strap line, with no reference to Gannon; a database of Mr Gannon’s clients, and a brochure style website together with a related domain name. HMRC issued their assessment on the basis that the £25,000 was an unauthorised payment, see §87(7).

The FTT made the following findings:

“[101] In our view there are so many actual issues with the Gannon assets that it is impossible to value them on the theoretical basis suggested by the Appellants and produce a reasonable market value. We have to assume that the assets are to be sold into the real market as they were at the date of the transaction, taking account of the fact that:

(1)

the database seems to have been valued on an unseen basis,

(2)

the trademark was unregistered at the relevant time,

(3)

there are potential legal issues with the transferability of the other IP assets because of the debenture, (we would expect that standard commercial terms of sale would include a warranty that the asset to be sold is not subject to any restrictions on sale),

(4)

we have concluded that given the lack of legal clarity on this point, this is an issue which a reasonable buyer would have taken account of as a significant risk and would have reduced the price which a buyer would have been willing to pay,

(5)

The realistic value of the domain name and website to anyone other than Mr Gannon is negligible because of its personal character.

102.

We accept that we can assume that one of the potential hypothetical buyers in the real market is Mr Gannon, but the price which he would pay in the open market has to be discounted to reflect the fact that there is no guarantee that he would be a purchaser.

103.

We also doubt whether even Mr Gannon would have been willing to spend the sums suggested rather than recreate the database for himself (after all he has all the relevant information to do this) and create a new logo (a new photograph of himself and strapline would be very easy to re-create).

104.

For these reasons we do not accept that the Appellant has discharged the burden of proof to overturn HMRC’s assessments for Gannon.”

Ground 3 reads:

“The Tribunal erred in law in concluding that the Appellant had not discharged the burden of proof as regards the database owned by Gannon Associates Limited and had reached the unsustainable conclusion that a database such as that owned by Gannon Associates Limited had nil value.”

This Ground therefore relates to only one of the IP assets transferred to the SSAS, the database of Mr Gannon’s client names.