This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

Company did not satisfy the commercial trading or risk to capital requirements

By Mark McLaughlin, February 2022

The appellant company’s appeal against HMRC’s refusal to authorise the issue of EIS compliance certificates was dismissed, as the company’s trade was not conducted on a commercial basis with a view to profit and the ‘risk to capital’ condition was not met.

The appellant company (Pip) applied to HM Revenue and Customs (HMRC) for authority to issue compliance certificates under the enterprise investment scheme (EIS) to shareholders relating to various tranches of shares issued between 17 May 2018 and 14 November 2018.

HMRC refused Pip authority to issue the compliance certificates. HMRC considered that Pip failed to meet EIS requirements. In particular: Pip failed to meet the ‘risk to capital’ condition; it was carrying out ‘excluded activities’; and it had engaged in prohibited investment activity. Pip appealed.

Pip argued that it carried on a trade, being the creation, development,

Subscribe to the McLaughlin’s Tax Case Library to get instant access
to the Tax Case Library.
14 day free trial , 90 day money back guarantee
Subscribe

Related or similar articles

Travel costs disallowed as hospital was not a temporary workplace
By Mark McLaughlin, April 2026
Payments to personal service company partly related to image rights which were outside the scope of IR35
By Mark McLaughlin, March 2025
Coronavirus job retention scheme: Support payments were incorrectly based on future agreed earnings which were not actually paid
By Mark McLaughlin, January 2025
Appeal struck out due to repeated non-compliance by taxpayer’s accountant
By Mark McLaughlin, June 2024
Taxpayer’s need to care for twin sister and her minor children at a time of crisis did not constitute exceptional circumstances
By Mark McLaughlin, October 2023