UT/2023/000055 - [2025] UKUT 00028 (TCC)

Hoopla was first incorporated with the company name CHF Project 5 Limited on 3 September 2014 changing its name to Daisy Boo and Monkey Too Limited on 15 December 2014 and then to its current name. Its original shareholder was CHF Media Group Limited, parent company of a group of companies (the “CHF Group”). The Group operated a fund through which third party investors were invited to subscribe for shares in special purpose investee companies each of which held the IP rights to a particular concept or show identified by a Creative Commercial Committee (“the Committee”), made up of employees from CHF Entertainment Limited (“Entertainment”), a member of the CHF Group.

The Committee considered pitches from creators of animated children’s entertainment content including from other Entertainment employees. One such employee was Helen Brown. She worked as a series producer for Entertainment and had worked up a proposal for a pre-school animation (“Daisy & Ollie”). Following an initial expression of support from the Committee, she entered into an agreement assigning current and future rights to intellectual property in the programme concept to Hoopla.

On 1 November 2016, Hoopla appointed Entertainment as its broadcast representative licensing Entertainment to exploit, in all forms of media and language, 52 episodes, by the entering into (subject to Hoopla’s approval) agreements with third parties in return for a percentage commission of the exploitation of rights revenue.

The same day Hoopla entered into a production services agreement (“PSA”) with Entertainment. In return for consideration of the sum set out in the agreed budget, Entertainment was appointed to deliver production services in connection with the production and delivery of 52 episodes. The budget, totalling £3,944,669 included all aspects of production and overheads. The FTT noted (at [86]) Helen Brown’s acceptance that this was a comprehensive agreement “which outsourced the whole of the production to Entertainment thereby avoiding the need to take on production employees or contractors…”.

Between March 2015 and 13 March 2018 Hoopla raised funds which HMRC accepted qualified for SEIS and then EIS. The current appeal relates however to shares issued in the period of 19 March 2018 to 19 October 2018 raising £1,130,907.40.

As regards whether the arrangements were disqualifying because Condition A was breached, the FTT noted (at [200]) that Hoopla had never challenged that there were arrangements and noted (at [201]) that it was accepted that the arrangements included the PSA and broadcast representative agreement which agreements Entertainment was a counterparty to. It considered Entertainment was a relevant person (being party to the PSA and therefore a party to the arrangements). It concluded that under the PSA, money raised by the share issue was “paid to or for the benefit” of a relevant person (Entertainment). The FTT accordingly held Condition A was satisfied and the arrangements were disqualifying (it being agreed the other constituent elements of the disqualification condition such as the arrangements having the requisite obtaining of tax relief purpose was satisfied). The FTT therefore dismissed Hoopla’s appeal.