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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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EIS: deferral relief: shares issued on or after 6 April 1998: information requirements

TCGA92/SCH5B/PARA16

The legislation provides for the Inspector to be notified in writing where any event occurs which brings a deferred gain back into charge, see VCM23110.

The investor has to notify HMRC within 60 days if:

  • the eligible shares are disposed of, other than a disposal within marriage, within five years of the issue of those shares (where the shares are issued on or after 6 April 1998 and before 6 April 2000),
  • the investor, or a person who has acquired the shares from the investor on a no gain/no loss transfer from their spouse or civil partner, becomes non-resident within that period,
  • the shares cease to be eligible as:
  1. an option has been granted over them, see VCM23280,
  2. the investor (or any associate) has received value from the company, (or any person connected with it), see VCM23300. A notification must be given even if the effect of a receipt of value is disregarded by virtue of a receipt of replacement value, see VCM23400 onwards. But, where replacement value has been, or is expected to be, received by the original supplier of value, the notification should include particulars of that receipt or expected receipt.
  3. the investor (or any associate) receives an investment-linked loan, see VCM23470.

For shares issued on or after 6 April 2000, the five year period is reduced to the period beginning with the issue of the shares and ending immediately before the termination date, see VCM23070, relating to them.

Similar requirements are placed on the company, and any person connected with the company who has knowledge of the matter.

Notification has to be sent to HMRC within 60 days if:

  1. the shares cease to be eligible shares because:
* an event occurs which causes the company not to be a qualifying company; 
* the requirements of ICTA88/S289 (1A) or ITA/S183(1) cease to be satisfied, see [VCM13080](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm13080); 
* investors, or their associates, receive value from the company or any person connected with it; a notification must be given even if the effect of the receipt of value is disregarded by virtue of a receipt of replacement value, see [VCM23400](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm23400) onwards; but where replacement value has been, or is expected to be, received by the original supplier of value, the notification should include particulars of that receipt or expected receipt;
* any payment, repayment, redemption, or repurchase falling within TCGA92/SCH5B/PARA14 (1) is made, see [VCM23440](https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm23440); or 
  1. the money raised by the share issue, or, as the case may be, 80% of it, is not used within the time limit in question, see VCM23020 (g) and (h), and the company has issued an EIS3 certificate to anyone who subscribed for shares in the issue.

In the case of a connected person, the 60 day period runs from the date of that person coming to know of the event.