York SD Limited & Ors vThe Commissioners for HMRC

Facts

The six appellant companies, York SD Limited and others, issued shares to investors under the enterprise investment scheme. Each installed a single rooftop solar panel in the UK, accompanied by an agreement to sell electricity to a homeowner, in order — as their witness Mr Hughes explained — to "start the EIS clock" and demonstrate commercial activity. From the outset each also planned to establish a wholly owned subsidiary abroad to develop larger ground-mounted solar projects; in the event the subsidiaries operated in Spain and Portugal, the "Iberian solar projects". HMRC decided that the shares were not eligible for EIS relief under section 234(3)(b) of the Income Tax Act 2007 and paragraph 1A of Schedule 5B to the Taxation of Chargeable Gains Act 1992. The First-tier Tribunal (Tax Chamber) dismissed the appeals in a decision released on 16 July 2025, finding that the appellants had failed to satisfy the purpose of the issue, trading and minimum period requirements because no qualifying business activity had been commenced by the QBA Deadline. The FTT granted permission to appeal on various grounds in November 2025 but refused it on Ground 1. The appellants renewed that application to the Upper Tribunal, which refused it on paper in March 2026, and renewed it again at an oral hearing.