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UT-2023-000116; - [2025] UKUT 00164 (TCC)
Fecha: 05-Mar-2025
Heading
Case Number:UT-2023-000116;
UT-2023-000116
Hearing venue: The Rolls Building
Fetter Lane
London
EC4A 1NL
CORPORATION TAX –relief for amortisation of goodwill – Schedule 29 Finance Act 2002 & Part 8 Corporation Tax Act 2009 – purchase of care home businesses including properties – allocation of purchase price to goodwill (available for subsequent amortisation with corresponding corporation tax debits) and underlying real property– UK GAAP – Financial Reporting Standards 6 & 7 – RICS “Red Book” valuation principles – goodwill amounts dependent on property valuations – FTT concluded the properties should be fair valued under UK GAAP using market value rather than depreciated replacement cost – whether FTT’s conclusion open to it on the evidence – Edwards v Bairstow
Stamp Duty Land Tax – just and reasonable apportionment of price paid for properties and for goodwill – paragraph 4, Schedule 4 Finance Act 2003
Judgment date: 2 June 2025
Before
MR JUSTICE MELLOR
JUDGE GUY BRANNAN
Between
NELLSAR LIMITED
Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Simon Farrell KC, Jamal Demachkie and Robert Morris, Counsel,
instructed by Charles Russell Speechlys LLP
For the Respondent: Michael Jones KC and Harry Winter, Counsel, instructed by the General Counsel and Solicitor to His Majesty’s Revenue and Customs
DECISION
- Heading
- Table of contents
- Introduction
- Background
- The issues before the FTT – in outline
- The statutory provisions, frs and rics materials
- Stamp Duty Land Tax
- Companies Act, Financial Reporting Standards and RICS Appraisal and Valuation Manual
- The FTT’s Decision
- The Decision - Corporation tax legislation
- The Decision - Corporation Tax and the Accounting context
- The Decision - The Court of Appeal decision in Denning
- The Decision - The FTT’s main conclusions on accounting and valuation
- The Decision - Stamp Duty Land Tax
- The Decision – the FTT’s summary and conclusions
- Ground 1: The FTT erred in considering whether there was an open market in assets similar in type and condition to the identifiable assets
- Ground 1 : the FTT erred when it stated at FTT [220] that GAAP required the valuation of “only the “identifiable asset” in each case, i.e. assuming there to be no current staff, residents, contracts
- Relevant general principles- Grounds 1, 2, 3 and 4(1)
- HMRC v Denning [2022] EWCA Civ 909 (“Denning”)
- Discussion: Grounds 1, 2, 3 and 4(1)
- Nellsar’s appeal - Ground 4 (2)
- Nellsar’s appeal - Ground 5
- HMRC appeal – Grounds 1 and 2
- Disposition
- costs
- MR JUSTICE MELLOR
- The “fair value” concept is explored in detail in FRS 7 “Fair Values in Acquisition Accounting”
- In paragraph 2 of FRS 7, the following relevant definitions are set out
- The following relevant passages appear in the “Statement of Standard Accounting Practice” section (paragraphs 4-31) of FRS 7
- Conclusions