Conditions not met for SEIS relief

In ten joined appeals the companies all had a common director AD who was a chartered accountant. In 2020 HMRC refused the companies’ claims for seed enterprise investment scheme (SEIS) relief and the taxpayer appealed.

HMRC said each company failed on three separate grounds:

• they did not satisfy the risk-to-capital condition in ITA 2007 s 257AAA;
• they did not satisfy the trading condition in ITA 2007 s 257DA; and
• they were engaged in disqualifying arrangements as set out in ITA 2007 s 257CF.

In relation to the eighth company HMRC also submitted that the ‘shares requirement’ in ITA 2007 s 257CA was not satisfied.

On the risk-to-capital condition the First-tier Tribunal accepted HMRC’s submission that there was artificial fragmentation and that this was motivated by the desire to obtain more SEIS relief than would have been possible had there been just one company.

This was enough...