Frances Delaney v The Commissioners for HMRC
Decision date: 11 March 2024
Neutral citation: [2024] UKFTT 214 (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
This appeal concerned whether Frances Delaney had entered an unconditional contract to transfer her nursery business to Miss Delaney's Nursery Schools Ltd (MDNSL) before 3 December 2014 so as to qualify for Entrepreneurs' Relief. The Tribunal found that although preparatory steps (incorporation, instructing solicitors, engaging staff, agreeing an underlease and obtaining later consents) were taken, no certain or enforceable contract with agreed terms and consideration existed before that date. The appeal was dismissed and HMRC’s refusal to allow Entrepreneurs' Relief was upheld.
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: high
Preparatory acts (including forming a company, taking steps towards transfer, and family-associated arrangements) do not, without agreed contractual terms, mutuality and an agreed mechanism for consideration, amount to an existing unconditional contract for disposal of a business; for TCGA purposes the disposal date is the date an unconditional contract is made, and absence of agreed price mechanism and necessary conditions indicates no contract existed here.
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 noted that contemporaneous documentation (tax returns, company accounts) and the absence of disclosed legal or advisory documents are relevant in assessing whether conduct created contractual obligations, and that familial or closely associated arrangements can lack the commercial certainty needed for enforceable contracts. These observations were illustrative rather than forming the core holding.