UK: Document production required as part of transfer pricing inquiry; scope of “personal goodwill”; field was not “mixed use” property for stamp duty purposes (First-tier Tribunal decisions)
Recent decisions of First-tier Tribunal
Document production required as part of transfer pricing inquiry
The First-tier Tribunal on May 28, 2026, held in Lifeplus Europe Ltd v. HMRC [2026] UKFTT 797 (TC) that a UK subsidiary of a U.S parent consolidated group was not required to produce its parent’s consolidated group accounts and entity‑level financial statements as part of a long‑running transfer pricing inquiry because HMRC did not show that the documents were “reasonably required” to check the UK company’s tax position and, in any event, the documents were not within the UK subsidiary’s possession or power.
Read a June 2026 report prepared by the KPMG member firm in the UK
Scope of “personal goodwill”
The First-tier Tribunal on June 4, held in WWM (Harrogate) LLP v. HMRC [2026] UKFTT 832 (TC) that an individual taxpayer could not contribute to a newly formed limited liability partnership (LLP), as a contribution to his capital account, separate “personal goodwill” from a business the taxpayer conducted through a corporation (and of which the taxpayer was an employee) for many years prior to the establishment of the LLP.
Although the tribunal accepted that personal goodwill can, in principle, be owned by an individual rather than the entity that owns the business, because the taxpayer had previously incorporated his business and transferred its goodwill to a company, all future goodwill accrued to the company as the taxpayer was its employee.
Read a June 2026 report prepared by the KPMG member firm in the UK
Field was not “mixed use” property for stamp duty purposes
The First-tier Tribunal on May 29, 2026, held in Sinclair & Anor v. HMRC [2026] UKFTT 798 (TC) that a field acquired with a farmhouse that was used for grazing sheep under an informal arrangement did not qualify for lower “mixed-use” rates for stamp duty land tax (SDLT) purposes, but was subject to the higher SDLT residential rates.
The tribunal considered a number of factors such as ownership, contiguity, layout, accessibility, privacy, historic and current use, legal constraints, and whether the land serves a function in relation to the dwelling, whether active or passive. In this regard, the tribunal emphasized that the agricultural classification or the mere existence of the grazing agreement, especially one that is informal and not exclusive, were relevant but not determinative in automatically rendering the field non-residential.
In this case, the tribunal found that the field remained part of the grounds because the field was contiguous with the farmhouse and gardens, it added to rural character and enhanced privacy and security of the farmhouse (despite the lack of views from the house), and despite the grazing arrangement, the grazing on the field was intermittent, lacked substantial or exclusive commercial exploitation of the field (i.e., the arrangement was akin to a ‘barter of convenience’), and ultimately, it was easily terminable.
Read a June 2026 report prepared by the KPMG member firm in the UK