Key Facts
- •Frances Delaney (Appellant) appealed HMRC's refusal of Entrepreneurs' Relief (ER) on the disposal of her nursery school business to her close company, Miss Delaney's Nursery Schools Limited (MDNSL).
- •The disposal occurred on September 1, 2015, after the December 3, 2014, deadline for ER eligibility for goodwill transfers from individuals to connected companies.
- •The Appellant argued that a contract for disposal existed before December 3, 2014, based on a series of actions, including company incorporation and lease agreements.
- •HMRC argued that these actions were preparatory steps, not a binding contract before the deadline.
Legal Principles
Section 28 TCGA deems the disposal time as the contract's creation date; if conditional, the date the condition is met.
Taxation of Chargeable Gains Act 1992 (TCGA)
Entrepreneurs' Relief (ER) is generally unavailable for goodwill disposals from individuals to connected companies after December 3, 2014.
Taxation of Chargeable Gains Act 1992 (TCGA), amended by Finance Act 2015
A contract requires an intention to create legal relations, mutuality of obligation, and certainty of terms.
Roger Dyer and Jean Dyer v HMRC [2016] UKUT 0381 (TCC)
Contract terms can be implied to reflect the presumed intention of parties but only if necessary; here the date of the contract didn't need implying.
Marks and Spencer Plc v BNP Paribas, Chitty on Contracts
Outcomes
Appeal dismissed.
The Appellant failed to prove the existence of an unconditional contract for disposal before December 3, 2014. The court found that actions taken before that date were preparatory steps, not a binding agreement, lacking certainty in terms, notably the price of the business.