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Monitor Audio v HMRC

In Monitor Audio v HMRC [2015] UKFTT 357 (15 July 2015) the FTT found that a bank holding an investment in a company could qualify as an ‘institutional investor’.

Monitor Audio designed and distributed loudspeakers. 43.75% of its share capital was held by West Register a 100% subsidiary of RBS. Monitor Audio’s corporation tax return included a claim for an additional 75% deduction for research and development expenditure (CTA 2009 s 1044). It contended that RBS was an ‘institutional investor’ under EU Recommendation 2003/361.

HMRC argued that the relief was not available because West Register was a ‘partner enterprise’ which is neither an institutional investor nor a venture capital company.

The FTT noted that an institutional investor is usually an institution with the function of investing on behalf of others in a wide range of ways; whilst a venture capital company is a company with the strategy...

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