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Another disastrous goodwill incorporation case

http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11639/TC07681.pdf

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And taxpayer badly represented again ("one arm tied behind his back" and "hopeless" per para 30) with masses of tax at stake (c£250k)!

http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j11639/TC0...

There's an interesting dissenting judgment (at least these judges didn't decide it was PAYEable). Paras 48 & 49 are helpful in showing a price adjuster clause may work to avoid this problem (so possibly the adviser can be sued).

See previous recent other similar case here: https://www.accountingweb.co.uk/any-answers/disastrous-er-goodwill-sale-...

The non-receipt of the "distribution" is a bit like that old debate we had here re non-receipt of dividends from a bust company, except here there was a credit to a DLA, so my points there are not relevant: https://www.accountingweb.co.uk/any-answers/can-you-declare-dividends-an...

Possibly on appeal the taxpayer can argue that if it's a distribution it's illegal & therefore void and not taxable like here: https://www.accountingweb.co.uk/any-answers/s455-charge-on-excess-divide...

The non-cash receipt argument is a bit like the non-cash expense argument here in reverse (except GAAP does not apply of course in this case re the taxpayer): https://www.bailii.org/ew/cases/EWCA/Civ/2020/663.html

Presumably if the sale had been instead for a (part) share issue all would have been well, as the value of the shares would automatically adjust downwards for the actual lower goodwill value and presumably that is outside ITEPA 2003 and the distributions legislation anyway if the nominal (and premium) share value exceeds the sale market value.

Why can't the parties simply agree to adjust the price lower after the event and (assuming that does not create a new contract*) why shouldn't that lower price take effect re the taxation of the original sale? No doubt the UT will enlighten us all re all these interesting issues in due course.

*Like para 254 here: http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11651/TC...

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