Disqualifying arrangements justify refusal of relief

The taxpayer was incorporated to exploit intellectual property to a pre-school animation programme and related spin-offs. In 2017 it asked HMRC for advance assurance as to its qualifying status for the purposes of the seed enterprise investment scheme (SEIS) HMRC confirmed it would give authorisation.

However after submitting compliance statements on the issue of its B shares HMRC issued compliance certificates for the shares issued before 15 March 2018 but refused to authorise later share issues.

The taxpayer appealed.

On HMRC’s assertion that the taxpayer did not have the intention to grow the trade because it was in effect a member of another company disguised as an independent company the First-tier Tribunal disagreed. It said on balance the taxpayer had objectives to grow and develop its trade in the long term. The absence of an objective to increase the number of employees...