The First Tier Tribunal (FTT) has ruled against HMRC and in favour of Inferno Films Ltd, deciding that enterprise investment scheme (EIS) relief should not be denied solely because the investee company had focused on a particular project and had subcontracted its activities.

Inferno Films was incorporated in April 2015 and worked as a film production company. Between July 2015 and February 2016, it issued shares under the seed enterprise investment scheme (SEIS), with HMRC’s approval, raising £100,000 in total.

Inferno Films then acquired all the rights for an unpublished script for a film called The Ballad of Billy McCrae and engaged a producer for the films who was to be paid a fixed fee of £350 per day, a total cap of £45,000, plus a 5% share of profits.