TaxCorporate TaxTribunal backs taxman in £4m EIS case

Tribunal backs taxman in £4m EIS case

A tribunal rules in the taxman's favour after shareholder benefit invalidates EIS claim

Tribunal backs taxman in £4m EIS case

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.”

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

1m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

3m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

3m Emma Smith, Managing Editor
Tax crackdown brings in £468m for HMRC

Corporate Tax Tax crackdown brings in £468m for HMRC

9m Accountancy Age editorial
Treasury Select Committee report released on Making Tax Digital

Accounting Standards Treasury Select Committee report released on Making Tax Digital

9m Stephanie Wix, Writer
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

7m Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

8m Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

9m Accountancy Age editorial