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Dividing the spoils – Foulser and Foulser v HMRC

There has been serial litigation between Mr and Mrs Foulser and HM Revenue and Customs dealing with share transactions which took place in November 1997, all wrapped within a tax avoidance scheme which failed.

The perceived value of the Company was increasing rapidly in the late 1990’s: in 1996 there were discussions for a possible sale of the combined 60% holding of Mr and Mrs Foulser for £12m; by 1997 this had increased to £16m. There were then detailed discussions in late 1997 relating to a proposed management buy-in with the 60% holding being valued at £26m. The discussions were underpinned by a belief that the company could generate profits before tax of some £4.5m in a normal year. 

Mr Brian Spence, chartered accountant and director of Montpelier Professional (Manchester) Limited was the expert for Mr and Mrs Foulser. Mr Spence valued Mr Foulser’s 51% shareholding in BG Foods at £6,000,000, and Mrs Foulser’s 9% holding at £243,750. The expert for HMRC was Mr Christopher Glover, who was described by the Tribunal as, "…one of the leading specialists in share valuation." Mr Glover’s valuation of Mr Foulser’s holding was £20,638,000, and that of Mrs Foulser £2,500,000.