In Foojit v HMRC [2019] UKFTT 694 (13 November 2019) the FTT found that EIS relief did not apply to a new issue of shares.
Foojit supplied ‘hybrid mail solution services’ to businesses. Before issuing new A and B shares it had sought ‘advance reassurance’ from HMRC that they would qualify for relief under the EIS. HMRC had confirmed that EIS authorisation would be provided if a satisfactory EIS 1 certificate was filed. This included certification that the shares complied with the requirements of ITA 2007.
After the issue of shares Foojit submitted Form EIS 1 but HMRC refused to grant authorisation on the basis that the B shares carried a preferential right. The issue was therefore whether ‘on a proper construction of ITA 2007 s 173(2)(a)’ the B shares carried a preferential right to dividends.
It was accepted that the B shares satisfied the requirements...
