Identity crisis
JG Ltd was incorporated in October 1999. Shareholders provided the initial finance from an issue of shares in February 2000. The shareholders claimed tax relief under the enterprise investment scheme in respect of two-thirds of this amount. In January 2001 JG Ltd acquired the shares in another greetings card company VML. A month later HMRC authorised JG to issue EIS certificates to subscribers of the February 2000 share issue. In mid 2001 JG stopped trading and became a non-trading parent company changing its name to VMHL in October 2002. HMRC said that tax relief to the shareholders was to be withdrawn because the company had breached TA 1988 ss 289(1A) and 293(2)(a). The company appealed.
The General Commissioners found in favour of the company so HMRC appealed.
The High Court said that on the date when shares were issued it had...
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