The client was a personal trainer who wanted to raise money to set up a gym in Central London by issuing shares qualifying for relief under the Enterprise Investment Scheme (EIS). The shares were to be issued by New Co. which would own and run the gym. The business model was slightly unusual in that the members of the new gym were to be personal trainers, who would pay a monthly fee to New Co. in order to use the gym facilities with their clients who did not become members.
A US parent company (US Co.) owned the entire issued share capital in a UK company (UK Co.). UK Co. owned the entire issued share capital in three UK companies, MG, GBS and CPP. US Co. intended to make a capital contribution to its UK subsidiary, UK Co. UK Co. would then use that contribution to make capital contributions to GBS and CPP. The purpose of the capital contribution to UK Co. was to enable it to provide its subsidiaries GBS and CPP with funds to acquire capital assets.