Vincent Alan Snell v Her Majesty's Revenue & Customs

Facts

Mr Vincent Snell, who had run the Stockport rubber products manufacturer Sovereign Rubber plc since his father's death in 1972, resolved by 1994 to sell the company, partly in order to acquire an estate in Scotland and run a commercial shoot there. Baker Tilly marketed the business, and after earlier offers came to nothing the company was sold, by a Sale Agreement dated 21 December 1996, to Inhoco 564 Ltd, the vehicle of an unrelated management buy-in team. Mr Snell and his two sons sold their shares for £8,037,500 in total, Mr Snell's own consideration of £7,317,500 comprising ordinary loan stock, 1998 loan stock, 1999 loan stock and deferred consideration; no cash was paid on completion. He also entered a two-year consultancy agreement with the purchaser. He ceased to be resident and ordinarily resident in the United Kingdom on 2 April 1997 when he left for the Isle of Man, having earlier explored residence in Jersey, and later moved to the Cayman Islands; the loan stocks were redeemed in the following tax year. By a closure notice dated 21 November 2002 the Revenue amended his self-assessment return for 1996/97, determining that section 137 of the Taxation of Chargeable Gains Act 1992 disapplied section 135, and he appealed on 9 December 2002.