Q&A: Upper Tribunal case of McEnroe & Newman v HMRC

The Upper Tribunal case of McEnroe & Newman v HMRC highlights two significant points: first the importance of accurate drafting to ensure that the economic reality is reflected to avoid any adverse tax implications; and secondly to consider carefully the purpose of appealing and adducing any new evidence before an appellate court or tribunal.

What are the facts of this case?

The appellants were joint owners of a residential care home business: Kingly Care Partnership Limited (KCPL). They decided to sell the shares in the business for the sum of £8m.

That sum was reflected in the sale and purchase agreement (SPA). At the time of completion KCPL owed Allied Irish Bank (AIB) approximately £1.1m. This was to be redeemed as part of the disposal so the appellants received net proceeds of £6.9m. This was the sum submitted on the appellants’ tax returns on the basis that this...