VCM26420 - EIS: income tax relief: purchase of shares by company from 'no relief' member: insignificant amounts

ICTA/S303AA; ITA/S224 (3)(a)(ii); ITA/S225

A repayment of share capital falling within VCM26400 is ignored if both it and the market value of the share capital repaid are insignificant compared with the market value of the remaining issued share capital of the company.

Note that, unlike ICTA/S301A and ITA/S215, (see VCM26310) this provision does not provide for a specified amount to be treated as insignificant. Our view is that 'insignificant' must be given its normal dictionary meaning of trifling or completely unimportant. Please refer to CT&VAT (Technical) if you are in any doubt.

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.