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HMRC internal manual

Venture Capital Schemes Manual

EIS: income tax relief: withdrawal or reduction of EIS relief: insignificant repayments ignored

ITA07/S224 (3)(a)(ii), ITA07/S225

A repayment of share capital falling within VCM15090 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 ITA07/S215, (see VCM15050) 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. SCEC officers should refer to CTIAA (Structure, Incentives & Reliefs team) if 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.