VCM26410 - EIS: income tax relief: purchase of shares by company from 'no relief' member: exceptions

ICTA/S303 (9) & (1B); ICTA/S303A (4); ITA/S224 (3)(f); ITA/S230; ITA/S224 (1)(a)(ii) & (4)

There are two exceptions to the rule set out at VCM26400. The first is that under Section 303 (9), ITA/S224 (3)(f) and ITA/S230 no reduction is to be made where share capital has been issued of a nominal value equal to the authorised minimum (£50,000) required for a public company to do business by CA85/S117, the Registrar of Companies having issued the company with a certificate under that Section, and any of it is redeemed within 12 months of the date of its issue. (But where a holder of shares which are redeemed in these circumstances has obtained relief on other shares, this exception does not prevent the reduction of that relief under (i) of VCM26320). The second exception is that, under Section 303 (1B) and ITA/S224 (1)(a)(ii) & (4), where the company's issued share capital includes shares in respect of which investment relief under the CVS has been given:

• where any of that investment relief is withdrawn as a result of the payment, income tax relief under the EIS is not withdrawn to the extent that the payment causes the withdrawal of investment relief; and
• where no investment relief is withdrawn, because the payment is less than £1000, income tax relief under the EIS is not withdrawn provided no arrangements for the purchase of the shares existed during the period from one year before the date when the shares on which investment relief was obtained were issued to the end of the day of issue.