HFFX LLP & Ors. v The Commissioners for HMRC
[2023] UKUT 73 (TCC)
Michelle McEnroe & Anor v The Commissioners for HMRC
19 October 2023
[2023] UKUT 255 (TCC)
Upper Tribunal
Two people sold their company. The buyer paid some money directly to a bank to pay off a company debt. The sellers argued this debt should reduce the amount of tax they owe. The judge said they should have raised this point earlier and didn't have enough evidence, so they still have to pay the tax.
Key Facts
- •Ms McEnroe and Ms Newman sold their shares in Kingly Care Partnership Limited for £8 million, subject to a working capital adjustment and earn-out.
- •The buyer paid £1.1 million directly to AIB to settle a company debt, and £6.9 million to the Appellants' solicitors.
- •HMRC argued the consideration was £8 million, while the Appellants claimed it was £6.9 million after deducting the AIB debt.
- •The FTT dismissed the appeal, finding the Appellants hadn't discharged the burden of proof.
- •The Appellants appealed to the Upper Tribunal, arguing the FTT erred in not considering the working capital adjustment provisions of the SPA.
Legal Principles
Burden of proof lies on the appellant to show the closure notice was incorrect.
None explicitly stated, but implicit in the FTT and UT decisions.
Contract interpretation – the court must ascertain the objective meaning of the contract language.
None explicitly cited, but forms the basis of the UT's decision.
Edwards v Bairstow [1956] AC 14 – challenges to factual findings must not be disguised attacks.
Georgiou v HMCE [1996] STC 463
Outcomes
Appeal dismissed.
The Upper Tribunal found the FTT did not err in law by not considering the working capital adjustment of its own motion, as neither party raised it. The Appellants' argument was deemed a disguised attack on the FTT's factual findings, lacking sufficient evidence.