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

Formwise’s business is the manufacture and installation of shower rooms, toilet cubicles and related goods. In 2009 all other forms of financing had been exhausted and the company was having severe cash flow problems [36]. A SSAS called the Formwise Pension Scheme was established on 11 June 2009, with Mr Morris, Formwise’s finance director [35] and MLT as the trustees.

On 6 July 2009, the same local firm of accountants, Savile, provided a valuation of certain IP (the FTT’s findings as to the nature of the IP is disputed and we consider this at Ground 1 below). In order to carry out the valuation, Savile was provided with management accounting figures for the nine month period to March 2009, together with financial projections for the three years ending June 2012. Savile concluded that the IP was worth “anything between £37,800 and £381,600”; Mr Dowding, later accepted that this range of values was “unusual” [157]. Savile then took the mid-point of that range and rounded it down by 20% “due to current financial conditions”, giving a final valuation of £145,000.

On 20 July 2009, Formwise entered into a Sale and Leaseback deal [24] under which (a) it agreed to transfer the IP to the SSAS for £145,000 [223], and (b) the SSAS agreed to lease it back to Formwise for a five year period, in exchange for monthly payments of £2,300.