THE REVENUE’S decision to deny capital gains tax relief to an enterprise investment scheme run by holding company Segesta has been backed up by the upper tribunal.
The company, which owns Blackpool Football Club, had borrowed £4.1m from the National Westminster Bank in December 1999, which it then transferred to the football club.
Blackpool then paid the same sum to Segesta’s main shareholder Owen Oyston’s personal account. Oyston used that money to subscribe for some 276,494 ordinary £1 shares in Segesta at £15 per share, an investment queried by HM Revenue & Customs. Segesta reduced its loan with the National Westminster Bank by £4.1m.
Oyston claimed this was eligible for capital gains tax (CGT) relief on the investment in Segesta, which he said qualified as an enterprise investment scheme (EIS).
HMRC, though, said the benefit Oyston received from the transaction invalidated the claim.
Shares are ineligible for EIS investment relief where the subscriber receives value from the company being invested in at any time during seven years after the investment. It was on this basis that HMRC blocked the move, as it allowed Segesta to afford Blackpool funds to pay back loans made on Oyston’s behalf.
The tribunal upheld HMRC’s findings, and a spokesman – cited by the Financial Times – said: “HMRC welcomes the decision of the upper tribunal, which has upheld the 2010 decision of the first-tier tribunal and has robustly confirmed HMRC’s established interpretation of the relevant provisions of the enterprise investment scheme legislation.”
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states