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An analysis by Travers Smith, Taxand UK
The Upper Tribunal’s decision in a recent case clarified when a company is treated as having begun trading for Enterprise Investment Scheme purposes. Although it agreed the companies involved in the case had not commenced trading, the Upper Tribunal found the First-tier Tribunal had misapplied the law and replaced its reasoning.
The Upper Tribunal emphasised that determining when a trade begins requires a multi-factorial, fact-specific assessment, applying the ordinary meaning of the legislation to the company’s activities. It rejected the idea of any bright-line test or single principle to determine the start of trade. Applying this approach, the Upper Tribunal concluded that neither company had begun trading within the required two-year period, meaning Enterprise Investment Scheme relief was unavailable.
Hannah Manning, Elissavet Grout and Madeline Gowlett from our UK member firm Travers Smith analyse how this decision come about, why it matters, what the First-tier Tribunal and Upper Tribunal decided and what this mean for businesses in the UK which you can read here.
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