UT-2023-000116; - [2025] UKUT 00164 (TCC)

Following the hearing of the appeal before the FTT, the Court of Appeal issued its decision in HMRC v Denning [2022] EWCA Civ 909 (“Denning”), which addressed the valuation of leasehold interests of nursing homes for the purposes of SDLT and capital gains tax. The valuations were carried out in accordance with the guidance in VPGA4. The question before the Court of Appeal was:

“Where that valuation method is applied, is the resulting figure the value of the leasehold interest, or the value of both the leasehold interest and “transferrable goodwill”?”

At the request of the FTT, the parties made written submissions on the relevance of Denning to the present appeal: FTT [187].

The Court of Appeal held that a valuation under VPGA4 was a valuation of the property alone, which included a reflection of the trading potential inherent in it. To the extent that this included elements of what had been usually referred to as “goodwill”, it was nonetheless an intrinsic part of the property. Also, the references to “transferrable [sic] goodwill” in GN 1 were to a feature which was “simply part of the inherent qualities of the property itself and its trading potential… There is only one asset, namely the property, and the profits method of valuation is, [as] its description implies, no more than a method of arriving at the value of the property.”