Inferno Films Limited v The Commissioners for HMRC
Decision date: 17 February 2022
Neutral citation: [2022] UKFTT 141 (TC)
Overall AI summary confidence: medium
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: medium
This appeal concerned whether Inferno Films Ltd met the s.157A ITA07 "risk-to-capital" condition for EIS relief in relation to a 3 April 2019 share issue. The Tribunal found that (a) it was reasonable at that date to conclude the company had long‑term objectives to grow and develop its film production trade despite focusing on completing one film and using subcontractors, and (b) there was a significant risk to investors' capital because returns depended wholly on the commercial success of a single project. The appeal was allowed and HMRC was ordered to authorise EIS compliance certificates for those shares.
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: medium
The decision indicates that s.157A(1)(a) can be satisfied where, on contemporaneous documents and witness evidence, a company legitimately intends long‑term growth even if initial fundraising and paperwork focus on a single project and operational activities are subcontracted; and s.157A(1)(b) can be satisfied where investor returns depend solely on a single project's commercial success so that a total loss of capital is a real possibility.
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 observed that outsourcing or subcontracting core activities does not automatically negate genuine long‑term growth objectives, particularly in industries where such arrangements are standard, and that investment memoranda prepared without professional advisers can still be probative when read with other contemporaneous evidence.