Marks v Revenue & Customs [2011] UKFTT 221 (TC) (01 April 2011)

Marks v Revenue & Customs [2011] UKFTT 221 (TC) (01 April 2011)

The Tribunal held that, as a matter of statutory interpretation, the Appellant held two separate assets (SMHL and FCO) on 31 March 1982, which must be valued separately for capital gains tax purposes. The presence of the Appellant as owner of both companies is relevant in the market, but his knowledge is limited to that of a prudent purchaser. The valuation of each company should assume the continued trading, management, and finance provided by the other. The Tribunal rejected the Appellant’s approach of valuing the companies together and using forecast profits, and instead adopted a method based on actual available information, turnover multiples, and appropriate PE ratios, resulting in...

Citation
[2011] UKFTT 221 (TC)
Parties
Appellant: Stephen Anthony Solomon Marks; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
01 April 2011
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal dismissed in part; Tribunal determined the correct valuation for capital gains tax purposes.
Legal Topics
Capital Gains Tax, Share Valuation, Taxation of Chargeable Gains, Reorganisation of Share Capital
Tax Law Capital Gains Tax Share Valuation Taxation of Chargeable Gains Reorganisation of Share Capital

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Parties

Stephen Anthony Solomon Marks

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether two related companies owned by the same person should be valued separately or together for capital gains tax purposes as at 31 March 1982
  2. 2 How to determine the market value of unquoted shares for capital gains tax purposes
  3. 3 Whether the owner of one company is a potential purchaser in the market for the other for valuation purposes

Ratio Decidendi

The Tribunal held that, as a matter of statutory interpretation, the Appellant held two separate assets (SMHL and FCO) on 31 March 1982, which must be valued separately for capital gains tax purposes. The presence of the Appellant as owner of both companies is relevant in the market, but his knowledge is limited to that of a prudent purchaser. The valuation of each company should assume the continued trading, management, and finance provided by the other. The Tribunal rejected the Appellant’s approach of valuing the companies together and using forecast profits, and instead adopted a method based on actual available information, turnover multiples, and appropriate PE ratios, resulting in...

Court Disposition

Appeal dismissed in part; Tribunal determined the correct valuation for capital gains tax purposes.

Orders

  • The Appellant’s shares in SMHL and FCO as at 31 March 1982 are to be valued separately.
  • The combined value for both companies as at 31 March 1982 is determined to be £4.152 million.