HMRC v Denning and others

In HMRC v Denning and others [2022] EWCA Civ 909 (1 July 2022) the Court of Appeal (CA) allowed HMRC’s appeal against the UT’s decision on the valuation of leasehold interest in two nursing homes granted to two companies on the incorporation of the taxpayer’s business.

The taxpayer owned the freeholds of two nursing homes and operated both as a sole trader. In 2010 she incorporated a group of three companies two as wholly owned subsidiaries of a parent in which she was the sole shareholder. She then transferred the businesses to the two subsidiaries. The transfers included the grant of five-year leases of the properties one to each company with no premium. The sale agreement also included deeds assigning the goodwill of the businesses to the companies for a total of £1.8m.  

HMRC challenged the figures for goodwill arguing that the...