Financial intermediary: receipt of exclusivity payment
In Countrywide Estate Agents FS Ltd v HMRC (TC00557 – 13 July) a company (C) carried on business as a financial intermediary. It received £25 000 000 from a life insurance company in return for entering into an exclusivity agreement. In its corporation tax return it treated this £25 000 000 as a capital receipt. HMRC issued an amendment charging corporation tax on the basis that it was a trading receipt. C appealed. The First-Tier Tribunal dismissed the appeal applying the principles laid down in British Dyestuffs Corporation (Blackley) Ltd v CIR CA 1924 12 TC 586 and holding on the evidence that C had not disposed of ‘anything in the nature of a capital asset’.
Why it matters: At first sight many people might assume that a payment of £25 000 000 would be capital rather...
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Financial intermediary: receipt of exclusivity payment
In Countrywide Estate Agents FS Ltd v HMRC (TC00557 – 13 July) a company (C) carried on business as a financial intermediary. It received £25 000 000 from a life insurance company in return for entering into an exclusivity agreement. In its corporation tax return it treated this £25 000 000 as a capital receipt. HMRC issued an amendment charging corporation tax on the basis that it was a trading receipt. C appealed. The First-Tier Tribunal dismissed the appeal applying the principles laid down in British Dyestuffs Corporation (Blackley) Ltd v CIR CA 1924 12 TC 586 and holding on the evidence that C had not disposed of ‘anything in the nature of a capital asset’.
Why it matters: At first sight many people might assume that a payment of £25 000 000 would be capital rather...
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