The following Tax practice note provides comprehensive and up to date legal information covering:
The EIS is designed to encourage investment in smaller, higher-risk trading companies by offering a range of tax reliefs to individual investors purchasing newly issued shares in those companies.
The EIS regime is prescriptive and sets out numerous requirements that must be met, including in relation to:
the individual investors (see Practice Note: EIS—conditions for relief: individual investor conditions)
the issued shares (see Practice Note: EIS—conditions for relief: issued shares, the funds raised and the arrangements in general), and
the issuing company (see Practice Note: EIS—conditions for relief: issuing company and EIS—conditions for relief: qualifying trades)
There is no statutory procedure for obtaining clearance in advance that a proposed share issue will qualify for EIS relief. However, an issuing company intending to meet the conditions for EIS relief can apply to HMRC for an advance assurance that, on the basis of information supplied with the application, it would authorise the company to issue certificates to individual investors enabling them to claim EIS tax relief. This assurance procedure relates solely to the qualifying status of the company, not to that of the investors (who must, in addition, satisfy all of the individual investor conditions).
A company expecting to issue EIS-qualifying share subscriptions will typically seek advance assurance from HMRC. In the past, this was often done before inviting applications for shares on the basis that this should
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