York SD Limited & Ors v The Commissioners for HMRC
Decision date: 16 July 2025
Neutral citation: [2025] UKFTT 877 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether six companies satisfied EIS requirements (purpose of issue s174, use of money s175, minimum period s176 and trading requirement s181) after HMRC withdrew EIS eligibility. The Tribunal found the appellants met the use-of-money requirement but failed the purpose-of-issue, minimum-period and trading requirements, rejected a deemed‑group trade argument, and dismissed the appeals upholding HMRC’s withdrawal.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The Tribunal’s ratio is that for EIS relief a qualifying trade must have commenced within the statutory timeframe and cannot be constituted merely by parent/subsidiary intentions or by aggregating distinct activities across group entities where the statute does not permit aggregation; by contrast, funds can be treated as “employed” for a qualifying activity where they were earmarked with sufficient precision for that qualifying purpose, so temporary diversions do not necessarily defeat s175.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal endorsed (as non‑binding guidance) that trade begins when a business is “open for business” — with infrastructure operational and steps exposing the trader to real commercial risk — and that preparatory steps alone are insufficient to establish commencement. It also observed that considering relevant post‑hearing authorities is proper under judicial comity and that a tribunal should explain departures from such decisions.