A company had to pay PAYE on the difference between its managing director's share sale proceeds and the market value of his shares, after losing an appeal to the Special Commissioners. Income tax may not have been due if the MD's enhanced sale proceeds had arisen from share rights in the articles, rather than a shareholders' agreement made after the MD got his shares.

Practitioners drafting "ratchets" and similar rights should make sure that they are intrinsic to the shares when acquired.

This was the first decision to test a charging provision introduced by Schedule 22, Finance Act 2003.