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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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EIS: deferral relief: shares issued before 6 April 1998: who is assessable?


Rules are necessary to determine on whom the deferred gain should be assessed if there is a chargeable event. These rules are needed because the original investor may have passed the shares on to their spouse or civil partner on a transfer to which TCGA92/S58 applied. Whenever there is a chargeable event within VCM22070 (a) to (d) the gain is assessable on:

  • the person making the disposal, or
  • the person who becomes non-resident.

For chargeable events before 6 April 1998 where the gain becomes assessable as a result of the chargeable events described at VCM35200 (e) and (f), the gain is assessable on:

  • the person who held the shares when the company ceased to qualify, or
  • the person who held the shares when Income Tax relief is withdrawn or reduced.

FA98 introduced TCGA92/SCH5B/PARA5 (1)(c) which replaces VCM35200 (a) and (e) for chargeable events taking place on or after 6 April 1998 so that the gain is assessable on the person who holds the shares when they cease to be eligible.