In Richard Villar v HMRC [2018] TC 6983 the FTT held that the sale of the business of an orthopaedic surgeon was a disposal of capital and not merely of a right to income. 

  • A renowned surgeon built up a practice under his own name.
  • He ran the business, including its administration and engaged the services of other surgeons who were not employees. He built up a client base and developed surgical techniques.
  • He sold his business to a third party for £1m a price determined by professional valuation.
  • The disposal comprised of his right to earn any income from the practice, the transfer of all intellectual property including the database of former patients, website domain name and the business name.
  • He agreed not to practise in the UK outside the company.
  • If he worked for the company, he would receive 75% of his previous fee to reflect that he did not handle the administration.
  • He was not obliged to work for the company and it was probable that he would work overseas and in disaster zones.

HMRC argued that he was not selling a business but simply changing his method of working: the business was in truth simply his skill as a surgeon.

The tribunal did not agree. It found that:

  • He was selling a business.

As an alternative argument, HMRC said that Income Tax Act 2007 s773(2) (referred to as “Chapter 4”) was engaged. This says that a capital payment could be taxed as income if the payment was both to exploit a person’s earning capacity and to avoid or reduce income tax.

The tribunal found that this arrangement engaged neither part of the section.

  • The sale was not of the taxpayer’s earning capacity.
  • Also, the arrangement was made in a tax-efficient way but that did not bring it within the scope of this anti-avoidance provision.


HMRC's share and assets valuation (SAV) has argued, for a very long time that the skillset of professionals such as doctors, surgeons and dentists remains their own personal asset and cannot be sold. Meanwhile, accountants, advisers as well as the professionals themselves know that because a) these people can be employed and so their skillset can be used by an employer and b) we all regularly see business sales such as the one above. Maybe SAV will have a bit of a re-think, maybe HMRC will appeal this decision.

Our practical tax guides on this topic

Goodwill and incorporation

Anti-avoidance provisions on sale of income

Selling a business: where do I start? 

Entrepreneur's relief 

External link

Richard Villar v HMRC [2018] TC 6983


Case report: