VCM21050 - EIS: general: procedure: the company's statement on form EIS1

ICTA/S306 (3) & (3A); ITA/S204 (2); ITA/S205; TCGA92/SCH5B/PARA6

A company whose new shareholders ask it for certificates enabling them to claim relief (whether income tax relief or CGT deferral relief) cannot issue them without first obtaining authority from HMRC. To do this the company must furnish HMRC with a statement to the effect that the conditions for the relief (apart from any which relate to the subscriber) have been satisfied so far, and that it intends to ensure that they continue to be satisfied. It is therefore not possible for a company to obtain authority to issue certificates once it has ceased to satisfy any condition. Thus, coming under the control of another company would make the issue of certificates impossible even where, had relief already been obtained, it would have been preserved by the operation of ICTA/S304A, ITA/S247 or TCGA92/SCH5B/PARA8 (see VCM20550).

Where there is more than one issue of shares, the company must submit a separate statement in respect of each issue. (All shares of the same class issued on the same day count as one issue). Statements must be made on the appropriate print of form EIS1 (see VCM21000).

A company cannot submit a statement until the trade (or research and development) for which the money was raised has been carried on for four months. (See VCM12100 for details as to what company may carry on the activity over this period.) This means that there must have been four months of actual activity; a company that entered into a few purchase and sale agreements shortly after issuing its shares and then did nothing for four months would not have traded for four months. There are exceptions for the winding up, dissolution, administration or receivership of a group company in certain circumstances.

However, there is no need for a company to delay submitting its statement until the money raised by the share issue has been employed (see VCM12090).

A company cannot submit a statement after the later of the following dates:

• two years after the end of the year of assessment in which the shares were issued,
• two years after the end of the period of four months referred to above.