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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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EIS: deferral relief: shares issued on or after 6 April 1998: pre-arranged exits


Deferral relief is not available where there are arrangements, (see below for meaning of ‘arrangements’), at the time of the issue of the shares, or before that time but in connection with the issue:

  1. for the subsequent repurchase, exchange or other disposal of the shares or of other shares in or securities of the same company, or
  2. for the cessation of any trade which is being or is to be or may be carried on by the company or a person connected with the company, or
  3. for the disposal of, or of a substantial amount of, the assets of the company or of a person connected with the company, or
  4. the main purpose of which, or one of the main purposes of which, is (by means of any insurance, indemnity or guarantee or otherwise) to provide partial or complete protection for persons investing in shares in that company against what would otherwise be the risks attached to making the investment.

In such cases the shares are treated as not being eligible shares so relief is not available.

The arrangements in (a) do not include any arrangement with a view to such an exchange of shares, or shares and securities, as is mentioned in TCGA92/SCH5B/PARA8, see VCM23230.

The arrangements in (b) and (c) do not include any arrangements applicable only on the winding up of a company unless:

  • the arrangements, at or before the time of the issue of shares, include arrangements for the company to be wound up, or
  • the company is wound up otherwise than for bona fide commercial reasons.

The arrangements in (d) do not include any arrangements if they are only to provide such protection against business risks as might reasonably be expected in normal commercial circumstances for the company itself, and/or one or more of its subsidiaries, if relevant.

Meaning of ‘arrangements’


Arrangements include any scheme, agreement or understanding, transaction or series of transactions, whether or not legally enforceable. Prior to 6 April 2012, the definition omitted reference to “transaction or series of transactions”.