Key Facts
- •Five companies appealed HMRC decisions on Enterprise Investment Scheme (EIS) share eligibility.
- •HMRC initially proposed a Rule 18 lead case (Cogeneration), later suggesting Rule 5 to hear Putney and Piston together.
- •Appellants requested Putney as the lead case under Rule 18.
- •The appeals centered on whether each company commenced trading within two years of share issuance (the EIS Deadline).
- •Appellants argued for similar factual patterns, while HMRC highlighted differing stages of preparedness and facts.
- •Putney had achieved financial closure and received liquidated damages for delays.
- •Piston hadn't identified a site until after the EIS Deadline.
- •The central legal issue was whether each company's activities constituted 'commencing trade' under sections 174(1), 179(1) and (2)(b), and 189 of the ITA 2007 and paragraph 16, Schedule 5B, TCGA.
Legal Principles
Overriding objective of the Tribunal Procedure Rules is to deal with cases fairly and justly.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, Rule 2
Tribunal can regulate its own procedure, including consolidating cases or treating a case as a lead case (Rule 5) or specifying a lead case under Rule 18.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, Rule 5
Rule 18 allows for lead case designation if cases share common or related issues; decisions on common issues are binding on related cases, but this can be challenged.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, Rule 18
EIS relief requires shares to be issued to raise money for a qualifying business activity, begun within two years of issuance.
Income Tax Act 2007, sections 157, 172, 174, 179, 189
Outcomes
Rule 18 Application (lead case) refused.
Insufficiently clear common or related factual issues across all appeals to justify a Rule 18 direction; differences in factual matrices were not merely nuanced, particularly concerning the stage of preparedness and the presence of liquidated damages in Putney.
Rule 5 Application (hearing Putney and Piston together) granted.
This approach addresses the differing factual situations while acknowledging potential efficiency gains from considering the appeals jointly.