M GROUP HOLDINGS LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2023] UKUT 00213 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Michael Green,Upper Tribunal Judge Phyliss Ramshaw |
| Subject Matter | 31 August 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 31 August 2023 |
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Neutral Citation: [2023] UKUT 00213 (TCC) Case Number: UT/2021-000106
UPPER TRIBUNAL
(Tax and Chancery Chamber) Hearing Venue: The Rolls Building,
Fetter Lane, London EC4A 1NL
Corporation Tax – Gain on disposal of shareholding – Substantial Shareholding Exemption –
interpretation of paragraphs 15A and 26 of Schedule 7AC Taxation of Chargeable Gains Act
1992 – whether 15A applies to a period when a company was not part of a group – no. Meaning
of “Group” – must be more than one company.
Heard on: 10 May 2023
Judgment date: 31 August 2023
Before
THE HONOURABLE MR JUSTICE MICHAEL GREEN
JUDGE PHYLLIS RAMSHAW
Between
M GROUP HOLDINGS LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Richard Vallat KC and Laura Ruxandu, counsel, instructed by Gowling
WLG (UK) LLP
For the Respondents: John Brinsmead-Stockham KC, instructed by the General Counsel and
Solicitor to His Majesty’s Revenue and Customs
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DECISION
INTRODUCTION
1. This appeal concerns the substantial shareholding exemption (“SSE”) from the charge to
corporation tax on gains arising on the disposal of a shareholding in a subsidiary by a
company.
2. The appellant appeals against a decision of the First-tier Tribunal (Tax Chamber) (“the
FTT”) released on 12 March 2021 ([2021] UKFTT 69 (TC)). The FTT dismissed the
appellant’s appeal against HMRC’s decision that the appellant was not entitled to exemption
from corporation tax on chargeable gains arising on the sale of its shareholding in a
subsidiary company.
3. Permission to appeal was granted by the FTT. The grounds of appeal are set out below.
One of the grounds of appeal for which permission was granted was in relation to an issue
not advanced before, and therefore not considered by, the FTT - the meaning of “group” for
the purpose of the relevant statutory provisions.
4. The dispute between the parties to be decided by the Upper Tribunal is the correct
statutory construction of section 170 of the Taxation of Chargeable Gains Act 1992
(“TCGA”), and paragraphs 15A and 26 of Schedule 7AC to TCGA.
BACKGROUND
5. The factual background is not in dispute. The facts were set out at paragraphs 5 to 18 of
the FTT decision.
6. The appellant is a private company limited by shares and the entire issued share capital
of the appellant was owned by Mr Peter Jeffreys.
7. Prior to 29 June 2015, the appellant traded as a stand-alone company providing services
under NHS contracts to hospitals and clinics.
8. In 2015, Mr Jeffreys started to receive interest from potential buyers for the shares in the
appellant. However, there were contingent tax liabilities arising from tax investigations by
HMRC which would have made the appellant less attractive to buyers. Advice was therefore
taken as to the most tax efficient way to structure any sale.
9. On 29 June 2015, the appellant incorporated Medinet Clinical Services Limited
(“MCS”) a private company limited by shares, as its wholly owned subsidiary.
10. On 30 September 2015, the appellant disposed of its trade and assets to MCS (“the hive
down transaction”).
11. On 27 May 2016, the appellant sold the entire issued share capital of MCS to Medinet
Bidco Limited, a third-party purchaser, for a consideration of £54,874,324.
12. The appellant filed a company tax return for its accounting period 1 October 2015 – 31
May 2016, on 3 February 2017 which recorded that the appellant had realised a chargeable
gain of £53,219,643, but it claimed that the entire gain was exempt from corporation tax on
the basis that it fell within the SSE.
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