A payment made in consideration for the cancellation of a contract to provide training was an income (as opposed to a capital) receipt and the First-tier Tribunal made no material errors in its conclusions. 

The second appellant (KLA) carried on the trade of business coaching from 1 October 2003 until the partnership dissolved on 22 December 2009. The partners of KLA were the first appellant (KL) and a company (RC); KL and his wife were director shareholders of RC. KLA entered into a 36-month agreement with a customer (T) to provide management training for T’s senior management on 14 January 2009. 

The agreement between KLA and T provided (among other things) that the training would be discontinued on the service of a termination notice by T and the payment of an early termination fee. The relevant