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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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EIS: income tax relief: the investor: overview

ITA07/S162

Chapter 2 of Part 5 deals with the requirements relating to the investor. There are three main requirements:

* The investor must have no ‘connection’ with the issuing company (see [VCM11020](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm11020)),
* The investor or any associate must not have received a loan which would not have been made, or would not have been made on the same terms, were it not for the EIS investment (see [VCM11030](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm11030)), and
* The investor must have subscribed for the shares for genuine commercial reasons and not as a part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax (see [VCM11040](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm11040)).

Guidance on the meaning of ‘connection’ is at VCM11050 to VCM11090.

See VCM11100 for the meaning of ‘associate’.

See VCM14210 for the obligations imposed on investors to notify HMRC of certain events which should result in relief being reduced or withdrawn, and VCM15170 for HMRC’s powers to obtain information.