FORMER Blackpool FC chief Owen Oyston has lost a battle with the taxman.
Mr Oyston, who remains the club’s majority shareholder, claimed Capital Gains Tax relief on shares bought in Segesta – the club’s holding company – back in 1999.
But HM Revenue and Customs (HMRC) claimed the transaction was not eligible for relief – and now a tribunal hearing has backed their decision.
The Upper Tribunal – held after Segesta appealed an identical decision by the First Tier Tribunal back in 2010 – heard the transaction began when Segesta borrowed £4m from the NatWest bank, which was transferred to Blackpool FC’s bank account.
The club then paid £4m to Segesta’s principal shareholder, Owen Oyston, who transferred the cash back to Segesta by buying 276,494 ordinary £1 shares in the company at £15 per share.
Segesta used the money to pay off the loan – and Mr Oyston claimed relief on his investment in Segesta.
The 78-year-old – who courted controversy after it was revealed the club paid him £11m last year – claimed the investment in Segesta shares qualified as an enterprise investment scheme (EIS), meaning it was entitled to relief.
But under tax rules shares are ineligible for EIS investment relief if the subscriber receives value from the company at any time for seven years after – something HMRC argued Own Oyston did.
They said he had benefited because the investment allowed Segesta to provide Blackpool with funds to repay loans made on Mr Oyston’s behalf, a stance the Upper Tribunal upheld.
A spokesman for HMRC said: “HMRC welcomes the decision of the Upper Tribunal, which has upheld the 2010 decision of the First-tier Tribunal and has robustly confirmed HMRC’s established interpretation of the relevant provisions of the Enterprise Investment Scheme legislation.”
Karl Oyston, the club’s current chairman, said the case was not yet over and the club would “comment fully once the matter has been concluded”.