Sale of shares

The taxpayer owned 99.9% of the share capital of Shirebrook Care Ltd which had been valued at £21m.

He received an offer for the shares and entered into a purchase agreement to sell in December 2009.

He made a purchase agreement for several assets in Shirebrook Care Ltd before finalising the agreement with the buyer of his shares.

Under the terms of the share arrangement the £297 638 debt owed by the taxpayer to Shirebrook Care Ltd as a result of the asset purchase agreement would not be recovered by the company.

But HMRC claimed the sum ought to be treated as a non-cash consideration for the shares. The taxpayer appealed.

The First-tier Tribunal found that the arrangement under which the taxpayer would not be required to pay for the assets purchased from Shirebrook Care Ltd made commercial sense only in the context of share sale...