1) Kieran Looney; 2) Kieran Looney and Associates (a firm) v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Judge Raghavan,Judge Greenbank |
| Neutral Citation | [2020] UKUT 0119 (TCC),[2020] UKUT 0119 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,22 April 2020 |
| Date | 22 April 2020 |
| Published date | 22 April 2020 |
[2020] UKUT 0119 (TCC)
Appeal number: UT/2019/0012
Tax treatment of certain payments under management training contract –
whether FTT erred in conclusion termination payment trading revenue
receipt (consideration for cancellation of the contract to provide training)
rather than capital (compensation for loss of a secret process in proprietary
performance management system) - House of Lords’ decision in Evans
Medical Supplies Ltd v Moriarty (H M Inspector of Taxes) ([1957] 37 TC
540) considered – no – whether FTT erred in conclusion other contractual
payments gave rise to tax liability on appellant (as opposed, through a multi-
party agreement, to other entities appellant owned) – no – appeal dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
KIERAN LOONEY;
KIERAN LOONEY & ASSOCIATES (a firm)
Appellants
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
JUDGE SWAMI RAGHAVAN
JUDGE ASHLEY GREENBANK
Sitting in public at The Royal Courts of Justice, Strand, London WC2 on 11
February 2020
Mr Nimal Fonseka of Senstone Limited, for the Appellant
Ben Elliott, counsel, instructed by the General Counsel and Solicitor to Her
Majesty’s Revenue & Customs for the Respondents
© CROWN COPYRIGHT 2020
DECISION
Introduction
1. Mr Kieran Looney, both in his personal capacity and as the nominated partner of
Kieran Looney & Associates (“KLA”) appeals against the decision of the First-tier
Tribunal (Tribunal Judge Rupert Jones and Tribunal Member Noel Barrett – “the FTT”)
released on 16 October 2018 (published as Looney, Kiernan Looney & Associates
(Partnership) v Revenue & Customs [2018] UKFTT 0619 (TC)) (“the FTT Decision”).
2. The matters giving rise to the appeals relate to a contract under which KLA agreed
to provide management training to the senior management of Trafigura Beheer BV, a
substantial commodities trading company. The appeal before the FTT concerned,
amongst other matters, the tax treatment of certain payments made in relation to that
contract being:
1) a payment of £1 million made on the early termination of the contract;
The FTT rejected Mr Looney’s case that the payment was capital
(compensation for loss of a secret process in Mr Looney’s proprietary
performance management system) and upheld HMRC’s analysis that
the payment was consideration for the cancellation of the contract and
therefore a trading revenue receipt (“the Termination Payment Issue”).
2) payments under the contract totalling £3 million.
The FTT rejected Mr Looney’s case that the payments were not part of
the income and turnover of KLA (as opposed to other entities Mr
Looney owned – Kieran Looney and Co Limited (KLCL) and a
Panamanian company (Nower Inc.)) (“the Income Recognition Issue”).
3. The Upper Tribunal (“UT”) granted permission to appeal in relation to the above
issues. We have set out the grounds on which permission was granted in more detail
below when we come on to discuss the grounds of appeal. The scope of what is before
us in the UT encompasses two appeals: first an appeal against an HMRC decision
amending KLA’s partnership return (the partnership appeal) which concerns both the
Termination Payment Issue and the Income Recognition Issue and second an appeal by
Mr Looney against a closure notice but which was only in relation to the partnership
profits. The results of the closure notice appeal therefore follow automatically from the
outcome of the partnership appeal.
The background facts
4. The FTT’s findings of fact are set out in the FTT Decision. We have summarized
the key findings that are relevant for the purposes of this appeal below.
5. KLA carried on the trade of business coaching from 1 October 2003 until the
partnership dissolved on 22 December 2009 (FTT [30]). The partners of KLA were Mr
To continue reading
Request your trial