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 shares) on 31 March 1982, which must be valued separately for capital gains tax purposes. The law does not permit grouping or pooling for valuation, even if the companies were commercially interdependent. In the statutory open market hypothesis, the Appellant, as owner of the other company, is a potential purchaser but is limited to the knowledge a prudent purchaser would require. The valuation of each company must assume the continued trading, management, and finance provided by the other, but each is valued as a separate asset. The Tribunal determined the appropriate...

Citation
[2011] UKFTT 221
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 (tax), Substantive Hearing and Decision
Outcome
Appeal allowed in part; valuations determined by the Tribunal for capital gains tax purposes.
Legal Topics
Capital Gains Tax, Share Valuation, Taxation of Chargeable Gains, Statutory Interpretation, Pooling of Shares
Tax Law Capital Gains Tax Share Valuation Taxation of Chargeable Gains Statutory Interpretation Pooling of Shares

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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 (tax), Substantive Hearing and Decision

Legal Issues

  1. 1 Whether the Appellant's shares in two related companies (SMHL and FCO) should be valued separately or together for capital gains tax purposes as at 31 March 1982
  2. 2 How to apply statutory share valuation provisions to unquoted shares in related companies under the Taxation of Chargeable Gains Act 1992
  3. 3 Whether the Appellant, as owner of both companies, is a potential purchaser in the statutory open market hypothesis

Ratio Decidendi

The Tribunal held that, as a matter of statutory interpretation, the Appellant held two separate assets (SMHL and FCO shares) on 31 March 1982, which must be valued separately for capital gains tax purposes. The law does not permit grouping or pooling for valuation, even if the companies were commercially interdependent. In the statutory open market hypothesis, the Appellant, as owner of the other company, is a potential purchaser but is limited to the knowledge a prudent purchaser would require. The valuation of each company must assume the continued trading, management, and finance provided by the other, but each is valued as a separate asset. The Tribunal determined the appropriate...

Court Disposition

Appeal allowed in part; valuations determined by the Tribunal for capital gains tax purposes.

Orders

  • The market value of the Appellant’s shares in SMHL and FCO as at 31 March 1982 is determined to be £4.152 million for both companies combined, apportioned as per the Tribunal’s findings.
  • HMRC to amend the Appellant’s self-assessment returns and closure notices in accordance with the Tribunal’s valuation.