Blackpool FC loan breaks EIS rules
HMRC came out on top in a legal dispute over tax relief for an investment related to Blackpool Football Club.
The upper tribunal dismissed an appeal by Segesta, the holding company for Blackpool FC, over the blocking of capital gains tax relief on a £4m investment.
The Segesta Limited v HMRC  UKUT 176(TCC) decision describes how in 1999 Segesta borrowed £4m from NatWest bank, which was transferred to Blackpool’s bank account. The club paid an equivalent sum into the personal bank account of club chairman Owen Oyston, a millionaire businessman who was Segasta’s principal shareholder at the time.
Oyston transferred the money to Segesta and bought 276,494 ordinary £1 shares in the company at £15 per share. Segesta used the money to pay off the NatWest loan.
Oyston claimed CGT relief on the investment in Segesta, but HMRC decided that the shares were ineligible under EIS rules due to the benefit Oyston derived from the transaction.
HMRC said Oyston benefited from the investment, as it allowed Segesta to provide Blackpool with funds to repay loans made on Oyston’s behalf. The upper tribunal upheld HMRC’s arguments and dismissed the appeal.