The capital gains tax (CGT) exemption for enterprise investment scheme (EIS) purposes was not available on a disposal of shares as no income tax relief had been claimed by the taxpayer on subscription due to having no taxable income in the relevant tax year. However, the decision of HM Revenue and Customs (HMRC) not to allow a late claim for EIS income tax relief was quashed and remitted back.

The appellant invested £50,000 in shares in January 2005, which HMRC accepted were eligible for EIS income tax relief. However, the appellant did not claim that relief because his taxable income for 2004/05 of £42 was less than his personal allowance.