Countrywide Estate Agents FS Ltd v HMRC

In Countrywide Estate Agents FS Ltd v HMRC (Upper Tribunal – 6 December) 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 holding on the evidence that C had not disposed of ‘anything in the nature of a capital asset’. The Upper Tribunal upheld this decision. Sales J held that the disputed payment was ‘income earned by the appellant from use of its goodwill not a capital sum received by it in return for giving up any part of its goodwill’.