Company met the capital to risk criteria

The taxpayer was a film production company set up as a special purpose vehicle to create a specific film.

In 2015 it obtained advance assurance that it was a qualifying company for the seed enterprise investment scheme (SEIS) and that allotted shares would be qualifying shares.

In 2017 and 2018 it issued B shares to three investors and in 2019 it applied for authority to issue SEIS certificates. HMRC rejected the application for two of the investors on the basis that the company did not meet the qualifying criteria. In essence the company could not should show that it had the intention to grow and develop in the long term.

The taxpayer appealed.

The First-tier Tribunal said it was apparent that the use of special purpose vehicles for each production was common in the film industry. This process in effect ringfenced profitable projects from unprofitable...