The Commissioners for Her Majesty's Revenue and Customs v Julian Blackwell
| Jurisdiction | UK Non-devolved |
| Judgment Date | 13 August 2015 |
| Neutral Citation | [2015] UKUT 0418 (TCC) |
| Appellant | THE COMMISSIONERS FOR HER MAJESTY’S |
| Respondent | JULIAN BLACKWELL |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/64/2014 |
[2015] UKUT 0418 (TCC)
Appeal number:FTC/64/2014
CAPITAL GAINS TAX – section 38(1)(b) Taxation of Chargeable Gains
Act 1992 – whether expenditure incurred “on” an asset and “reflected in the
state or nature of the asset at the time of disposal” – whether expenditure
incurred “in establishing, preserving or defending … title to, or to a right
over, the asset”
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S Appellants
REVENUE & CUSTOMS
- and -
JULIAN BLACKWELL Respondent
TRIBUNAL:
MR JUSTICE NEWEY
JUDGE CHARLES HELLIER
Sitting in public at the Rolls Building, London on 6 and 7 July 2015
Michael Jones, instructed by the General Counsel and Solicitor to HM Revenue
and Customs, for the Appellants
Kevin Prosser QC and Charles Bradley, instructed by Shipleys LLP, for the
Respondents
© CROWN COPYRIGHT 2015
2
DECISION
1. This appeal relates to the effect of section 38(1)(b) of the Taxation of
Chargeable Gains Act 1992 (“TCGA 1992”), which specifies the expenditure a 5 taxpayer may deduct in computing his capital gains.
2. In 2006 Mr Blackwell paid £17.5 million to be released from certain obligations
he had undertaken in 2003 in relation to his shares in Blackwell Publishing (Holdings)
Limited (“BP Holdings”). Shortly after making that payment he disposed of those
shares. He sought a deduction for that sum under section 38(1)(b) in computing his 10 capital gain on the disposal of the shares. HMRC refused to allow the deduction. Mr
Blackwell appealed to the First-tier Tribunal (“the FTT”) (Judge Richard Barlow and
Mr Duncan McBride), which allowed his appeal. HMRC now appeal against that
decision (“the Decision”).
The facts 15
3. There is no dispute about the primary facts. They are to be found in paragraphs
4 to 23 of the Decision. We take the following summary in large part from the
skeleton argument of Mr Kevin Prosser QC and Mr Charles Bradley, who appeared
for Mr Blackwell.
4. Mr Blackwell held class A (and other) shares in BP Holdings such as would 20 enable him to veto a special resolution, including one to approve or facilitate a
takeover of the company. In 2003, following an unsuccessful takeover attempt by
Taylor & Francis Group plc (“Taylor & Francis”), Mr Blackwell entered into an
agreement (“the 2003 agreement”) with Taylor & Francis to do and not to do certain
things connected with his A shares in return for £1 million. 25
5. In 2006 John Wiley & Sons Inc (“Wiley”) made an offer for BP Holdings for a
much higher sum than Taylor & Francis had offered in 2003.
6. Mr Blackwell wished to accept Wiley’s offer, but he was advised by his
solicitors that the only way to avoid the risk of litigation was not to take any step in
respect of the offer. 30
7. Taylor & Francis offered to release Mr Blackwell from the 2003 agreement if he
paid them £25 million.
8. Mr Blackwell decided that it was necessary to make that payment in order to
allow the Wiley deal to go through. He believed that the payment would enable the
Wiley bid to be accepted. 35
9. On 17 November 2006 Mr Blackwell entered into a new agreement (“the 2006
agreement”) with Taylor & Francis whereby he was released from his undertakings
under the 2003 agreement. In return he paid Taylor & Francis £25 million of which
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