HMRC internal manual

Venture Capital Schemes Manual

VCM13020 - EIS: income tax relief: the issuing company: UK permanent establishment requirement


This legislation applies in respect of shares issued on or after 6 April 2011 and replaces the previous requirement that the issuing company or a qualifying 90% subsidiary carry on the qualifying trade wholly or mainly in the UK. It was introduced as part of the conditions under which the schemes were granted State aid approval by the European Commission.

For an EIS company issuing shares, the requirement is that the issuing company must have a permanent establishment in the United Kingdom throughout Period B that is, at the date the shares are issued. (See ITA07/S159 and VCM10540 for an explanation of Period B).

The legislation does not stipulate where the monies raised under the schemes, are to be used.

For the definition of ‘permanent establishment’ see VCM13030.