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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: return of value to be disregarded


Where an investing company has its investment relief withdrawn or reduced by reason of a repayment being received by another member of the company, (FA00/SCH15/PARA56 (2)), the circumstances may result in gains deferred under the EIS being revived. In certain circumstances these repayments are disregarded for the purposes of the EIS.

The conditions are that the ‘the relevant amount’ must not exceed £1,000 and there must have been no ‘repayment arrangements’ in existence at any time in the period beginning one year before the issue of the shares (on which investment relief is withdrawn or reduced) and ending at the end of the issue date.

‘The relevant amount’ is calculated using the formula:

X - 5Y where:

X = the amount of the repayment,

Y = the aggregate amount of the investment relief withdrawn by reason of the repayment.

‘Repayment arrangements’ means arrangements that provide for a repayment by the issuing company (or any subsidiary of that company), or for anyone to be entitled to such a repayment, at any time. This applies whether or not the subsidiary referred to was such a subsidiary at the time of the repayment or when the arrangements were made.

‘Subsidiary’ has the meaning in TCGA92/SCH5B/PARA14 (7), see VCM23440.