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HMRC claims victory in £4m Blackpool FC EIS case
by William Robins on Jun 06, 2012 at 12:58
HM Revenue & Customs (HMRC) has won a battle to deny tax relief to an enterprise investment scheme (EIS) related to Blackpool Football Club.
The Upper Tribunal has dismissed an appeal by Segesta, the holding company for Blackpool FC, over the blocking of capital gains tax relief on a £4 million investment.
The case relates to the transfer of £4 million among companies linked to the football club. In 1999, Segesta borrowed £4 million from NatWest bank, which was transferred to Blackpool’s bank account. Blackpool then paid £4 million to Segesta’s principal shareholder, Owen Oyston, who transferred the money to Segesta by buying 276,494 ordinary £1 shares in the company at £15 per share. Segesta then used the money to pay off the NatWest loan.
Oyston claimed CGT relief on the investment in Segesta. He claimed Segesta qualified as an EIS meaning his investment in it, a subscription of shares, qualified for relief. However, HMRC claimed the shares were ineligible under EIS rules due to the benefit Oyston received from the transaction. Shares are ineligible for EIS investment relief where the subscriber receives value from the company being invested in at any time during seven years after the investment.
HMRC said that Oyston benefitted from the investment, as it allowed Segesta to provide Blackpool with funds to repay loans made on Oyston’s behalf. It added that another loan Oyston was due, from a company called Zebaxe which provided administration services for Segesta, was repaid due to the investment. The Upper Tribunal upheld HMRC’s verdict.
The money owed from Zebaxe related to the fallout from funds stolen from one of Oyston’s other companies, Jebwill, in the late nineties. Oyston served a three-and-a-half year prison sentence for the rape and indecent assault of a 16-year-old girl between 1996 and 1999, and during that time, a Jebwill employee, Robin Oakley, stole from the company, which was owned jointly by Oyston and the Derbyshire County Council pension fund. In December 1999 Oyston took personal liability for the sums lost from Jebwill and acquired a right to repayment from Zebaxe.
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by Michelle Abrego on Apr 24, 2014 at 08:25