Qualifying trading began after deadline

The taxpayers – whose trade was generating and supplying electricity – issued shares on 4 April 2016 with the intention that subscribers would be entitled to relief under the enterprise investment scheme (EIS) scheme. HMRC said the shares were not eligible because neither company had begun trading by the EIS deadline – here 4 April 2018 (ITA 2007 s 179(2) (b)).

The taxpayers argued that ‘trade is a broad commercial concept’ and the touchstone for starting to trade as dealing with customers. Putney began construction work on the power station in September 2017 but due to delays by the contractor the plant did not become operational until August 2018. It had however entered into two contracts for the supply of electricity before the EIS deadline.

Piston said it had reached the point of engaging with customers by the EIS deadline and had ‘the real possibility of...