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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
Updated
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EIS: income tax relief: the issuing company: issuing company requirements: overview

ITA07/S180

This part of the manual deals with the rules applying to the investee company - that is, the company issuing the shares. Guidance on investor requirements is at VCM11000+ and general requirements is at VCM12000+.

The issuing company must be a ‘qualifying company’. To be a qualifying company it must satisfy certain conditions, and most of those conditions apply throughout a period that starts with the issue of the shares and ends immediately before the termination date (VCM10540).

It follows that it cannot be known for certain whether a company qualifies in relation to a given share issue until the termination date related to that issue. This applies in respect of both income tax relief and deferral relief (VCM23000+).

The issuing company must meet requirements pertaining to:

* UK permanent establishment (see [VCM13020](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13020)),
* Financial health (see [VCM13040](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13040)),
* Trading (see [VCM13050](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13050)),
* Carrying on a qualifying business activity (see [VCM13060](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13060) and for excluded activities see VCM3000+),
* Unquoted status (see [VCM13090](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13090)),
* Control and independence (see [VCM13100](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13100)),
* Gross assets (see [VCM13110](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13110)),
* Number of employees (see [VCM13120](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13120)),
* Qualifying subsidiaries (see [VCM13130](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13130)),
* Property managing subsidiaries (see [VCM13140](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13140)).