VCM20050 - EIS: general: loan-linked investments

ICTA/S299A; ITA/S164; TCGA92/SCH5B/PARA15

No relief is available if, within the three year straddling period (Period A for shares issued on or after 6 April 2007) formerly the five year relevant period - see VCM20600), the subscriber, or any associate, receives a loan from any person which would not have been made, or would not have been made on the same terms, were it not for the EIS investment. This includes cases where credit is given or a debt due from the subscriber or associate is assigned.

Our interpretation of these provisions is given in SP6/98.

Any individual who receives a loan which is caught by the provision is obliged under ICTA/S310 (1), ITA/S240 or TCGA92/SCH5B/PARA16 (1) to give notice of the fact to an officer of HMRC within 60 days of the date when the loan was made.

As regards claims to interest relief in respect of loans used to acquire shares in close companies where EIS relief is claimed, see IM3804.