Martin Mann reported on the case of HMRC v Mertrux Limited in his 17 August 2012 article ‘Upper Tribunal favours HMRC in CGT roll-over case’. The facts of the case are set out in Martin’s article but, broadly, it involved the sale of a car dealership business where the consideration received was split between goodwill and a compensation payment.
HMRC argued against the taxpayer’s contention that the compensation element qualified for CGT roll-over relief and the Upper Tribunal agreed, reversing the decision by the First-tier Tribunal. The taxpayer has now taken the case to the Court of Appeal (Mertrux Ltd v Revenue and Customs Commissioners (EWCA Civ 821), decided on 9 July 2013).
The Court of Appeal has upheld the decision by the Upper Tribunal. The sale agreement dealt with goodwill and the compensation element separately. The latter related to the right to operate the Mercedes dealership and this was not derived from goodwill belonging to Mertrux and so roll-over relief was not available on this part.