Jurisdiction(s):
United Kingdom

EIS commencement of trade requires operational infrastructure: UK FTT rejects contract-only approach in Putney Power v HMRC

Published on: 08 October 2024

Published by a LexisNexis Tax expert

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Article summary

Putney Power Ltd and another v HMRC [2024] UKFTT 870 (TC)

The two companies were established by an investment manager to build and run power plants with capital raised through the EIS. Each company allotted shares on 4 April 2016 and sought from HMRC the issue of EIS compliance certificates. In 2020, HMRC determined that EIS relief was not available. The decisions rested on the conclusion that neither entity had commenced trading by the statutory deadline under the EIS rules, namely 4 April 2018. For the first appellant (Putney), construction of its plant started in September 2017; however, due to the contractor’s delays, the facility did not become operational until August 2018. Ahead of the EIS deadline, Putney had entered into two electricity supply agreements, both expressed to take effect once the plant went live. The sole question before the FTT was whether the companies had in fact started trading by the relevant EIS date. Accordingly, entitlement to relief ultimately turned solely on that point and its timing under the legislation...

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