Peter Kennedy v The Commissioners for Her Majesty's Revenue & Customs, TC 07987
| Jurisdiction | UK Non-devolved |
| Court | First-tier Tribunal (Tax Chamber) |
| Judge | Jonathan CANNAN |
| Judgment Date | 05 January 2021 |
| Neutral Citation | [2021] UKFTT 0003 |
| Reference | TC 07987 |
| Appellant | Peter Kennedy |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
[2021] UKFTT 0003 (TC)
FIRST-TIER TRIBUNAL
TAX CHAMBER
Appeal number: TC/2018/07990
BETWEEN
PETER KENNEDY
Appellant
-and-
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE JONATHAN CANNAN
MR MICHAEL BELL
The hearing took place in public on 10 September 2020 by way of remote video hearing
on the Tribunal video platform. A face to face hearing was not held because of the Covid-
19 pandemic.
Mr Michael Ripley instructed by Cowgills Chartered Accountants for the Appellant
Mr Alan Hall of HM Revenue and Customs for the Respondents
TC07987
CAPITAL GAINS TAX – entrepreneurs’ relief – section 169I TCGA 1992 – whether Condition
A satisfied – whether throughout the period of one year ending with the disposals the
appellant was an employee of the company – existence of an employment – whether the
employment was terminated prior to disposal – appeal dismissed
1
DECISION
INTRODUCTION
1. This appeal concerns the appellant’s entitlement to entrepreneurs’ relief for capital gains
tax. The appellant is Mr Peter Kennedy (“Mr Kennedy”) who was until August 2013 a director
of an AIM listed company called Bglobal plc (“Bglobal”). In 2014-15 he made a disposal of
shares in Bglobal realising a taxable gain of £2,555,589. In 2015-16 he made a second disposal
of shares in Bglobal realising a taxable gain of £449,397. Mr Kennedy claimed entrepreneurs’
relief in relation to both disposals in his tax returns for the relevant years. HMRC opened
enquiries into those returns in January 2017 and on 24 July 2018 closure notices were issued
denying the relief claimed by Mr Kennedy.
2. Relief has been refused by HMRC on the basis that Mr Kennedy was not an officer or
employee of Bglobal throughout the periods of one year ending with the date of each disposal.
Mr Kennedy contends that he was an employee of Bglobal throughout the periods. That is the
broad issue on the appeal. It is for Mr Kennedy to satisfy us in relation to each disposal that he
was an employee of Bglobal throughout the period of one year ending with the date of disposal.
3. Mr Ripley, who appeared for Mr Kennedy, relied on three propositions in order to
establish entitlement to the relief:
(1) Mr Kennedy was employed by Bglobal pursuant to a written service agreement.
(2) The service agreement was never properly terminated.
(3) As a matter of fact and law, Mr Kennedy’s employment by Bglobal subsisted at
the date of each disposal.
4. Mr Kennedy gave evidence in support of his appeal. He made a witness statement dated
2 September 2019 and gave oral evidence. He was cross-examined on his evidence by Mr Hall
who appeared on behalf of HMRC. Based on Mr Kennedy’s evidence and the documentary
evidence before us we make the findings of fact set out below. We firstly set out some
background facts which are not in dispute and then make our findings of fact relevant to the
issues concerning Mr Kennedy’s employment status with Bglobal and the termination of his
employment.
5. In the light of our primary findings of fact we consider the question of whether, as a
matter of fact and law Mr Kennedy’s employment with Bglobal was terminated prior to the
two disposals of shares.
RELEVANT STATUTORY PROVISIONS
6. We can set out the relevant statutory provisions quite briefly. Provision for entrepreneurs’
relief (now known as “business asset disposal relief”) is contained in section 169H Taxation of
Chargeable Gains Act 1992 (“TCGA 1992”) which provided at all material times as follows:
(1) This Chapter provides for a lower rate of capital gains tax in respect of qualifying business
disposals (to be known as “entrepreneurs’ relief”).
(2) The following are qualifying business disposals —
(a) a material disposal of business assets: see section 169I,
7. A material disposal of business assets is defined by section 169I(1) to include a disposal
of shares in a company, subject to certain conditions set out in section 169I (6)-(7B). For
present purposes Condition A is relevant which provides as follows:
(6) Condition A is that, throughout the period of 1 year ending with the date of the disposal —
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