This was an in-person appeal heard over six days about a corporation tax deduction for goodwill acquired on the purchase of care home businesses, including their properties. It was decided that open market fair values (and not the depreciated replacement cost used by the taxpayer) of the land and buildings could be determined by reference to an adjusted operational entity valuation and that this would enable the valuation of goodwill.
The use of the depreciated replacement cost by the taxpayer was held not to comply with FRS7, so its accounts were not drawn up in accordance with GAAP. As a result, the allowances available to the taxpayer had to be recomputed on the basis of GAAP-compliant accounts using revised property valuations. There are also some interesting remarks about just and reasonable apportionment of the purchase price between goodwill and properties for SDLT purposes. The FTT used “hot-tubbing” of the four expert witnesses, where they were empanelled together at the same time and jointly questioned by counsel and the judging panel towards the end of the hearing. This technique is little used in the FTT but is more common in Canadian jurisdictions.