Putney Power Limited & Anor v The Commissioners for HMRC
Decision date: 26 September 2024
Neutral citation: [2024] UKFTT 870 (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 Tribunal considered whether Putney Power Ltd and Piston Heating Services Ltd had begun carrying on qualifying trades for Enterprise Investment Scheme (EIS) purposes by the two‑year deadline of 4 April 2018. Applying a commercial-substance, fact‑sensitive test, the Tribunal found that neither company had assembled operational infrastructure or begun operational activities by that date (Putney was still in construction; Piston had not finalised site-specific arrangements), so the shares were not EIS-eligible and both appeals were dismissed.
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
For EIS timing, a trade commences only when the putative trader is "open for business": that requires assembling the operational infrastructure necessary to provide the goods or services (which need not be absolutely complete but must be operationally usable) and taking steps that expose the trader to real operational risk and reward. A contractual matrix or financial close standing alone does not establish commencement where the infrastructure is still under construction or performance is conditional on commissioning.
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 expressed that authorities show tensions and favoured a commercial-substance, fact-sensitive approach to commencement questions; it also noted that contractual protections for delay (e.g. liquidated damages) may indicate an inability to trade rather than commencement, and that different business types affect how much pre‑trading setup is required.