HMRC has just lost in the First Tier Tribunal, in a decision which ruled that the sale of Headingley cricket ground and associated activities back in 2005 did indeed constitute the sale of a 'business'. HMRC had tried to argue that it was not the sale of a business and that it was (at best) the sale of a significant capital asset with some ancillary income streams. The tax treatment of business sales (with associated goodwill) can be quite different to the sale of a mere capital asset. In this case it looks like the seller (The Leeds Cricket Football & Athletic Company Limited) was seeking to rely on rollover tax reliefs that are only accessible on a business sale.
The Tribunal examined the activities of the seller in some detail, including the substantial catering, hospitality and advertising businesses which it ran in addition to the leasing of the facilities to Yorkshire County Cricket Club. All of these required active management by the seller. HMRC sought to argue that because the income was largely dependent on the physical premises, the income from those businesses could be classified as ancillary. The Tribunal strongly disagreed; that would be like saying that the income from a hotel was ancillary to the property rather than a business in its own right.
It is clear from the Contract and supporting documents that the parties intended to, and did, transfer the Property and the Cricketing Business on 30 December 2005. The evidence provided by the Appellant’s witnesses provided further support for this contention. Further, the Cricketing Business had goodwill associated with it and this was also transferred at the same time. None of the arguments deployed by [HMRC] were sufficient for us to come to a different conclusion.