The consideration received by a company’s shareholders for their shares for tax purposes was the amount specified as the consideration in the sale and purchase agreement and did not include a company debt repaid out of the consideration.  

During the tax year ended 5 April 2014, the appellants sold a company (‘KCPL’), in which they were both 50% shareholders. The sale and purchase agreement stated that the consideration for the shares was £8m. 

KCPL owed an amount of approximately £1.1m to Allied Irish Bank (AIB). On the day of the sale, the buyer’s solicitors transferred an amount of £8m to the appellants’ solicitors, who transferred funds to AIB to redeem the loan owed by KCPL. After payments of professional fees by the appellants’ solicitors, the appellants each received amounts just over £3.3m.

The appellants duly submitted tax returns showing consideration for the