VCM15050 | EIS: income tax relief: withdrawal or reduction of EIS relief: value received by the investor: receipts of insignificant value

ITA07/S214, ITA07/S215

Where the amount of the value received is ‘insignificant’ it is ignored. An amount is insignificant for this purpose if:

• it does not exceed £1000, or

• if it exceeds £1000 it is insignificant in relation to the amount subscribed by the individual for the shares in question.

Our view is that for the purpose of the second category above ‘insignificant’ must be given its normal dictionary meaning of trifling or completely unimportant.

Where there is more than one receipt which is, on its own, insignificant as defined, the rule must be applied to the total amount received within Period C (see VCM10540). For example, suppose an individual received value of £600 on 1 February 2012 and the same sum every three months thereafter. Assuming £1200 was not regarded as insignificant, the individual would be regarded as receiving value of £1200 on 1 May 2012, a further £1200 on 1 November 2012, and so on.

To ensure that this relaxation is not used for avoidance purposes, it is provided that the amount of any value shall not be regarded as insignificant if it is received under arrangements which exist at any time in the 12 months ending on the date of the share issue.