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

The FTT (at FTT [224]-[228]) summarised its conclusions as follows:

“224.

We have therefore reached the following conclusion in principle.

225.

We consider that since we regard operational nursing/care homes to be sufficiently similar in type and condition to the “identifiable asset” which is required to be valued in each of the present appeals, it is possible to ascribe market values pursuant to paragraph 9(a) of FRS 7 to each such “identifiable asset” by reference to sales of operational nursing/care homes on the open market by applying appropriate adjustments as contemplated by RICS guidance (see [212] to [214] above).

226.

Accordingly, it was not open to Nellsar to recognise the homes in question at depreciated replacement cost pursuant to paragraph 9(b) of FRS 7; the relevant accounts of Nellsar were therefore not drawn up in accordance with generally accepted accounting principles and accordingly were not “correct accounts” for the purposes of Part 1 of Schedule 29 FA02 or the successor legislation; and the legislation should therefore apply as if “correct accounts” had been drawn up, recognising the fair values of the respective properties on acquisition at their respective market values (see [218] above).

227.

For this purpose, “market value” should be assessed on the basis of the homes as standalone assets, without staff, residents, contracts, permits, chattels of any kind (apart from those so affixed at the time of sale as to be part of the property under the general law) or any other accoutrements of a business (see [220] above). The market value will, in line with RICS guidance, reflect the trading potential of the property in each case.

228.

As to the relevant apportionments for SDLT purposes, these are to be carried out following the basic methodology set out in the HMRC Practice Note, but using market values of the relevant assets (see [223] above). 229. If the parties are unable to agree any market values required in order to implement this decision in principle, then such market values will ultimately need to be determined by the Upper Tribunal (Lands Chamber).”

Permission to appeal was granted by the Upper Tribunal on the following five grounds. As will be seen, Grounds 1-4(1) are closely linked.