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Hoopla Animation Ltd v HMRC

This appeal to the Upper Tribunal (UT) concerns the anti-avoidance provisions in the Enterprise Investment Scheme rules. Under those rules, relief is not available where the funds raised by the share issue are paid for the benefit of a person who is party to the arrangements.

Here, a special purpose company was set up to hold the rights of a pre-school TV programme. The money raised by the company via EIS was paid under a commercial contract to another related company to which all of the production and delivery of the programmes was outsourced.

The FTT had held that the production company was a party to the arrangements and the UT has now agreed.

The taxpayer argued that being a party to the arrangement had a very narrow meaning and that, because the outsourced company did not have creative control of the programmes, it could not be a party to the arrangements. It also argued that the phrase ‘payment for the benefit of’ did not cover commercial