York SD Limited v HMRC: Upper Tribunal grants partial permission to appeal in EIS solar panel case

The Upper Tribunal (Tax and Chancery Chamber) has granted permission to appeal on one of two remaining grounds in a dispute over enterprise investment scheme relief claimed by a group of solar energy companies, while refusing permission on the other.

In York SD Limited & Ors v The Commissioners for HMRC [2026] UKUT 304 (TCC), Upper Tribunal Judge Jonathan Cannan considered a renewed application for permission to appeal following an oral hearing on 9 June 2026, after having earlier refused permission on the same ground on paper. Harriet Brown and Rebecca Sheldon appeared for the appellants, with Christopher Stone KC for HMRC.

The underlying dispute concerns a First-tier Tribunal decision, released in July 2025, dismissing appeals against HMRC's refusal of EIS relief on shares issued by six companies within the Foresight group. Each company had installed a single rooftop solar panel on a UK residential property, intending to satisfy the requirement that a qualifying trade commence within two years of the share issue. The companies also established subsidiaries in Spain and Portugal to develop larger, ground-mounted solar projects, described in the proceedings as the Iberian solar projects.

The First-tier Tribunal had rejected arguments that the appellants, through their subsidiaries, commenced a qualifying trade by the relevant deadline, and separately rejected the contention that the legislation permitted the activities of each company and its subsidiary to be treated as a single deemed group trade. Even had such a concept applied, the tribunal found the UK and Iberian activities fundamentally different in nature and concluded that the rooftop panel activity alone was not conducted on a commercial basis with a view to profit, given a monthly income of £9.20 against fixed assets of £3,650.

Permission to appeal had already been granted on three grounds concerning the correct legal test for when a trade commences, an issue on which the appellants rely on the subsequent Upper Tribunal decision in Putney Power Limited v HMRC [2026] UKUT 105 (TCC). The application before Judge Cannan concerned a separate ground, split into two limbs.

The first limb argued that the First-tier Tribunal made findings of fact it was not entitled to reach on the evidence, applying the established high threshold from Edwards v Bairstow [1956] AC 14. Judge Cannan rejected this limb, finding that the tribunal's findings, including that the rooftop installations were not commercially viable and were undertaken principally to meet EIS requirements, were properly open to it on the evidence, including oral testimony from the appellants' own witnesses.

The second limb argued that the tribunal had wrongly based its conclusions for all six appellants on the factual circumstances of York alone, failing to consider distinguishing evidence, including that two of the companies had entered into engineering, procurement and construction contracts before the relevant deadline. Judge Cannan accepted this was realistically arguable, noting that separate consideration of the other appellants' circumstances did not clearly emerge from the decision, a point HMRC's counsel did not dispute.

Permission to appeal was accordingly refused on the fact-finding challenge but granted on the ground concerning the tribunal's treatment of the appellants other than York.