B Khan v HMRC

In B Khan v HMRC [2021] EWCA Civ 624 (30 April 2021) the Court of Appeal upheld the Upper Tribunal’s decision that the taxpayer was chargeable to tax on the distribution arising from a buy back of a company’s shares which occurred as part of a series of transactions for the sale of the company.

Mr Khan was an accountant who prepared the management accounts of CAD Ltd an employment bureau. The existing owners wanted to take their profits from the company which was in decline and then sell it on for a modest amount to Mr Khan who would then effect an orderly winding up and benefit from any continuing profits. The following transactions were carried out to achieve that result. Mr Khan borrowed £1.95m from CAD Ltd and used it together with a further £18 000 to buy all 99 shares...