Caselaw Digest
Caselaw Digest

Mark Alan Smith v The Commissioners for HMRC

30 October 2023
[2023] UKFTT 912 (TC)
First-tier Tribunal
HMRC said two financial advisors owed them tax because their company gave them their client lists. The court said the advisors owned the lists themselves, so there was no gift to tax.

Key Facts

  • •Discovery assessments for income tax were issued to Mr. Smith and Mr. Corbett (Appellants) for the year ended 5 April 2013.
  • •HMRC considered that Simpsons Independent Financial Advisors Ltd (SIFA) made a distribution to the Appellants in the form of goodwill credited to their capital accounts in Simpsons Wealth Management LLP (SWM).
  • •The business of SIFA was transferred to SWM via a business transfer agreement (BTA).
  • •Mr. Corbett's and Mr. Smith's capital accounts in SWM were credited with £1,179,000 and £1,017,000 respectively, recorded as "goodwill introduced".
  • •The Appellants were independent financial advisors with personal client relationships.
  • •The Appellants' client relationships were considered their personal assets, not SIFA's.
  • •SIFA's accounts did not attribute any value to goodwill associated with the Appellants' client relationships prior to the transfer to SWM.

Legal Principles

Definition of "distribution" for income tax purposes.

Section 1000, Corporation Tax Act 2010 (CTA)

Charge to income tax for distributions.

Section 383, Income Tax (Trading and Other Income) Act 2005 (ITTOIA)

Generally accepted accounting practice (GAAP) in calculating company profits.

Section 46, Corporation Tax Act 2009

GAAP compliant accounts provide the best guide to a true and fair view of a company's financial position.

HMRC v NCL Investments Limited [2022] UKSC 9

Outcomes

Appeal allowed.

There was no distribution made by SIFA to the Appellants because the goodwill attributed to them was their personal asset, not SIFA's. The accounts, considered to be GAAP compliant, did not reflect goodwill belonging to SIFA.

Similar Cases

Caselaw Digest Caselaw Digest

UK Case Law Digest provides comprehensive summaries of the latest judgments from the United Kingdom's courts. Our mission is to make case law more accessible and understandable for legal professionals and the public.

Stay Updated

Subscribe to our newsletter for the latest case law updates and legal insights.

© 2025 UK Case Law Digest. All rights reserved.

Information provided without warranty. Not intended as legal advice.