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,