Disguised attack on factual findings of First-tier Tribunal

The taxpayers sold their business in which they were each 50% shareholders. The sale and purchase agreement stated that the consideration was £8m. On the day of the sale the buyers’ solicitors transferred £1.1m to Allied Irish Bank to clear a loan owed by KCPL and paid the balance to the taxpayers.

In their tax returns the taxpayers reported gains as 50% each of £6.9m. After an enquiry HMRC decided the consideration should be £8m.

The taxpayers appealed on the basis that the £1.1 was paid direct to the bank to discharge the debt.

The First-tier Tribunal dismissed their appeal. It accepted that the taxpayers did not receive £1.1m but concluded it did not follow that they were not entitled to it under the contract.

The taxpayers appealed to the Upper Tribunal. They said the First-tier Tribunal should have considered the working capital adjustment in clause 3.3 of the...