VCM14130 | Venture Capital Schemes Manual: the Enterprise Investment Scheme: income tax relief: investor procedures: investor conditions to claim tax reliefs

ITA07/S203

An investor cannot claim tax relief until the company has sent in a compliance statement as described at VCM14090 and HMRC has authorised the company to issue a compliance certificate to the investor (claim form- EIS3). The investor must meet all the conditions needed to be a qualifying investor - see VCM11000 +.

An investor who wishes to claim relief in respect of a subscription may do so where the following conditions are satisfied:

• the investor must have received from the company form EIS3, which certifies that the company has not, so far, breached any of the conditions for being a qualifying company.

• The company completes page 1 of the EIS3 certificate in full as well as providing the Unique Investment reference (UIR) for the relevant share issue. The certificate should then be signed by an officer of the company, or an authorised agent. Page 3 of EIS3 should be left blank by the company because this is the page the investor completes to make a claim for tax relief.

• the investor must not, by the date of the claim, have breached any of the conditions for being a qualifying individual eligible for relief in respect of the shares,

• the company must have carried on the trade (or research and development) for which the money was raised for 4 months, except where it was unable to do so by reason of having gone into receivership or liquidation. (In practice, the investor will not receive form EIS3 until this condition is satisfied.)

If the subscription was made through an Approved Investment Fund (VCM16050), the investor will not receive forms EIS3, but a form EIS5 from the fund manager showing all the investment made through the fund.

An investor can claim EIS relief up to five years after 31 January following the end of the tax year in which the shares are treated as issued—this may be either the tax year of actual issue (current year) or, if a carry-back election is made under section 158(4b) ITA 2007, the preceding tax year. Therefore, it is essential to track which shares are treated as issued in which year to ensure claims are made within the correct timeframe. The claim period is longer than for most reliefs, to take account of the fact that it is dependent on the company first making its application and having that approved by HMRC. See VCM14090 for the time limits for a company submitting a compliance statement.