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. 

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:

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.


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: