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HMRC internal manual

Venture Capital Schemes Manual

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VCM: Introduction to EIS income tax relief: periods A, B and C

ITA07/S159

Qualification periods are periods for which a provision applies.

As part of the HMRC tax law rewrite the names of these periods have changed, though the periods themselves have not. They are described below - ITA07 applies for shares issued after 6 April 2007 and ICTA88 applies for shares issued before that date.

Period A - Section 159(2)

This starts with the incorporation of the company, or two years before the date on which the shares are issued if that is later, and ends the day before the termination date. It is also referred to as the ‘relevant period’ in the legislation. (This was called the ‘three year straddling period’ under ICTA88/S312(1A)(a).)

Period B - Section 159(3)

This is the period beginning with the issue of the shares and ending immediately before the termination date (see below). This is also referred to as the ‘relevant period’ in the legislation. (This was called the three year period under ICTA88/S312(1A)(b).)

Period C - Section 159(4)

This starts twelve months before the issue of the shares, and ends immediately before the termination date. (This was called the period of restriction under ICTA88/S312(1).)

Termination date

The termination date is:

  • the third anniversary of the date of issue of the shares, or
  • if the money raised by the issue was for the purpose of a trade (one that is a qualifying business activity within ITA07/S179(2)) and the company has not begun to carry on that trade on the date of issue of the shares, it is the third anniversary of the date on which the company begins to carry on the trade in question (as regards the date when a company begins to carry on a trade see BIM80505).

So, if a company which is already trading issued shares on 10 April 2010, the termination date is 10 April 2013 and the three year period ends at midnight on 9 April 2013.