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

Hoopla further submitted that the FTT erred in looking at only part of the arrangements. Ms Brown argues the relevant person needed to be party to all arrangements (and that it was therefore incumbent on FTT to set out all the arrangements because without doing that it was impossible to say whether party to the arrangements as opposed to merely a party to some or other part of them).

As HMRC identify, this point was not argued in Hoopla’s grounds of appeal before the UT but we are content nevertheless to address it given its obvious lack of merit. If the PSA contract was part of the arrangements (here there was no dispute it was), then we cannot see how someone who was party to that would not also then be party to the arrangements. They would by definition be so. It is also inconsistent with the analysis in Coconut UT (at [56]). In that case it was disputed that the PSA was part of the arrangements. However, the UT having found the PSA (in the form of oral agreement foreshadowing the documentary one) was part of the arrangements, a central component of its view that Entertainment was party to the arrangements was that Entertainment was party to the PSA.

There could be no error of law on the part of the FTT and also no consequent error of approach by it in not identifying the scope of the arrangements. The position before the FTT was that it was clear the contract was part of the arrangements. It was thus not necessary to set out in full what those arrangements were and for the reasons we have explained it would not make any difference to the conclusion that Entertainment was by definition (through its status as a counterparty to a contract which was part of the arrangements) a party to the arrangements. (Hoopla’s further written arguments that submit various individual agreements such as the broadcast representation agreement could not amount to arrangements – and therefore that Entertainment or others could not be party to them - similarly do not assist; the existence of the arrangements was not disputed and no-one was suggesting such agreements looked at in isolation constituted “arrangements”.)

As mentioned the arguments Hoopla now makes on the meaning of “party to” were not raised before the FTT and the FTT did not accordingly address them. We have explained why Hoopla’s arguments that Coconut UT wrongly interpreted the legislation must be rejected. The UT expressed the words as requiring the person to “…have sufficient involvement in the arrangements that it is appropriate to treat them as participating in that purpose”. Although the FTT did not have the benefit of that reasoning there is nothing in the FTT analysis which is at odds with the UT’s statutory interpretation.

We turn then to Hoopla’s case that the FTT’s misapplied the correct interpretation of “party to” in view of the particular facts of the case. These arguments must be rejected too. The FTT’s application of the test to reach the same result the UT in Coconut did (that Entertainment was a party in circumstances where Entertainment was a counterparty to a contract that was found to be part of the arrangements) was entirely consistent with the analysis in Coconut UT.

In view of the areas that were not in dispute, and the relevant facts that were before the FTT, there can be no doubt the FTT was correct to identify Entertainment as a party to the arrangements. As HMRC’s submissions correctly emphasise, Entertainment was clearly part of the plan to produce Daisy & Ollie and for the investors in Hoopla to receive EIS relief. A key part of the arrangements was that Hoopla was entirely dependent on Entertainment to produce and develop Daisy & Ollie pursuant to the PSA. As a result, Entertainment was plainly a party to the arrangements as it was a counterparty to the PSA.

In arguing why the FTT was wrong to consider Entertainment as a person who was a “party to” the arrangements Hoopla rely on the observations in Coconut UT at [54] which posited circumstances where a third party purchaser or supplier unaware of the purpose of the arrangements “might not be regarded as a party to arrangements” (see extract above at [22]).

On the back of that, Hoopla submits that if someone is a party to an agreement which forms part of the arrangements that is aware of them but in relation to which it has no greater control they self-evidently are not a party to the arrangements. Hoopla’s written arguments also made a number of points regarding Entertainment’s lack of control over the way Hoopla “moved its business forward” and to no member of the CHF Group having sufficient “control, involvement or right” under the arrangements.

However the above third party scenario envisaged by the UT is plainly not on point. The “third party” referred to by the UT is not yet even a party to any agreement that would become part of the arrangements. The tentative and uncertain situation referred to by the UT’s example where there is only be “the possibility…at some stage in the future…[a services provision or asset sale agreement] might be reached..” is a world away from the situation here where Entertainment’s provision of production and development were key to the arrangements. The UT was careful to state it did not need to and therefore was not expressing a view on whether such a third party was a party. The UT also did not say anything on whether once the third party became party to the agreement whether they would then be regarded as a “party”. Moreover, when the UT came to apply the relevant principles to the facts (at [56]) it is significant that the UT put Entertainment’s role in that case (a party to the production services contract whose involvement was designed into the arrangements from the outset) in contrast with “an unwitting third party who become involved and had no knowledge of disqualifying purpose”.

In our view Hoopla’s arguments that Entertainment could not ensure Entertainment’s services were issued or that it did not have creative control over the production of the programming or merchandise in no way detract from it plainly being open to the FTT to conclude Entertainment had “sufficient involvement” such that it was appropriate to treat it as constituting a “party to” the arrangements (in line with the approach the UT in Coconut UT set out).

There was no error in the FTT’s interpretation and application of the words “party to”. We therefore dismiss Ground 1.

We also dismiss Ground 2 (that the FTT did not attempt to define what being a “party” to the arrangement means) as well. The FTT was not asked to consider the definition of the “party to” in the detail we were and therefore did not consider the issue. Its conclusion, that a counterparty to a contract (accepted to part of the arrangements) meant the counterparty was a “party to” such arrangements, did not in the circumstances require any definition to be drawn up of what “party to” meant. The words were not in dispute and were susceptible to their ordinary interpretation.