Nicholas Bell & Ors v The Commissioners for HMRC
Decision date: 20 November 2023
Neutral citation: [2023] UKFTT 989 (TC)
Overall AI summary confidence: medium
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: medium
This case concerned the market value on gifting dates of AIM‑quoted Cityblock (29 July 2003) and Strategic Retail (19 December 2003) shares donated to charity, and related procedural complaints that HMRC’s very delayed enquiries rendered a fair hearing impossible. The Tribunal accepted HMRC’s expert (Mr Strickland) overall, treated illiquid post‑float trades with caution but gave weight to certain prospectus‑reported transactions, and found values of 12p (Cityblock) and 14.25p (Strategic Retail). Applications to debar HMRC or summarily allow the appeals for abuse of process were dismissed; specified increases to closure‑notice assessments were directed for some appellants.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
Where shares are not quoted on the Daily Official List (AIM), section 273(3) requires valuers to assume the hypothetical prudent purchaser would have the information they would reasonably require, so valuation may properly be based principally on public formal documents such as prospectuses; in an illiquid AIM market with a very small free float, post‑float transaction prices are not necessarily reliable evidence of market value, and a cost/net asset approach can be appropriate where reliable forecasts or earnings data are lacking.
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 that a hypothetical prudent purchaser would give significant weight to consideration recorded in the prospectus (for example, consideration‑shares and fee‑in‑shares arrangements) where those involve informed parties, and that non‑public evidence from promoters, Nomads or subscribers is not relevant to the s273(3) hypothetical purchaser. It also noted that a free float materially below typical liquid‑market thresholds (the Tribunal cited about 15–20%) undermines reliance on post‑float trade prices.