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HMRC internal manual

Venture Capital Schemes Manual

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EIS: deferral relief: shares issued on or after 6 April 1998: investment-linked loans

TCGA92/SCH5B/PARA15

If an investor subscribes for shares which are eligible for deferral relief and he or she (or any associate) receives an investment-linked loan within the relevant period, see VCM23290, the shares are treated as:

  • never having been eligible shares if the loan is made on or before the date of issue of the shares, or
  • ceasing to be eligible shares if the loan is made after that date.

Meaning of Investment-linked loan

A loan is investment-linked if it would not have been made, or would not have been made on the same terms, were it not for the EIS investment.

For these purposes the giving of any credit to the investor and the assignment of any debt from the individual to the lender are both treated as the making of a loan.

When considering investment-linked loans, any reference to an investor includes a reference to an associate, see VCM23370, of his.

Where the investor is a trustee, see VCM23540.

Statement of Practice

Our interpretation of this provision is given in SP6/98 - which replaces SP3/94, the text of which is reproduced at VCM11030.