VCM8110 | Venture Capital Schemes: the changes in detail: independent investor

ITA07/S164A

An individual who claims Income Tax relief under the EIS must be independent from the company and hold no other shares in the company at the time the individual invests in the company. The only exception is if the existing shares are a risk finance investment or the shares are ‘subscriber shares’ and:

• the individual holds shares in the company, all of which were issued to the individual when the company was founded; or

• the shares were acquired when a pre-formed dormant company was bought ‘off the shelf’.

The same rules apply to shareholdings of the individual in companies that are members of the same group as the issuing company at the time the shares are issued.

A “risk finance investment” is a share or shares subscribed for under the EIS, the SEIS or the Social Investment Tax Relief (SITR) rules, for which the company submits a compliance statement to HM Revenue & Customs under ITA07/S205, 257ED or 257PB respectively.

Note that this definition is more limited than a “relevant investment” under ITA07/S173A, which includes loans made under SITR.