Mertrux Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 21 June 2011
Neutral citation: [2011] UKFTT 398 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Mertrux sold its Mercedes dealership business and treated the excess of the sale price over tangible assets as goodwill, claiming roll‑over relief. HMRC disallowed half the claim, treating part of the Territory Release Payment (TRP) as compensation for surrender of dealer rights. The Tribunal found the whole excess was payment for goodwill, that the goodwill founded on the dealer agreement transferred to the purchaser, and allowed the appeal, discharging HMRC’s amendment.
Ratio decidendi
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AI confidence in this ratio decidendi summary: high
Where a purchaser pays more than the value of tangible assets for a going concern, the excess is prima facie consideration for goodwill absent extrinsic evidence to the contrary; a multilateral compromise deed (DoVT) does not by itself justify apportioning part of the payment to non-goodwill compensation—apportionment requires evidence that distinct non-goodwill assets or rights were in fact being compensated.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed it would be speculative to infer a collective intention from a global compromise deed to justify apportionment, and noted that contractual adjustment mechanisms (eg clause 11.2 reducing TRP for impairment of goodwill) are relevant when assessing whether payments reflect goodwill value over time.