Since my article regarding HMRC’s pyrrhic victory in their case against CHF PIP, it has now brought two further cases to the first tier tribunal (FTT) focused on the risk to capital requirement. This is a feature of both the seed enterprise investment scheme (SEIS) and the enterprise investment scheme (EIS).
Cry Me a River Ltd (TC8507) used the SEIS and Inferno Films Ltd (TC8472) used the EIS to raise funds, but the legislation is the same for both schemes. The companies in both cases are in the film industry. Also in both cases HMRC asserted that the companies did not meet the risk to capital requirement, but HMRC lost on that argument at FTT.
It is worth setting out what the risk to capital requirement says:
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Mark Ward is an Associate Director with BDO LLP, where he has specialised in the SEIS and EIS since 2016. He is a regular speaker on the subject and (with David Brookes) is co-author of Bloomsbury Professional’s Venture Capital Tax Reliefs book