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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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Share loss relief: individual and corporate claimants: individual claimants: type of company invested in: qualifying trading company: history of the concept

For claims to relief in respect of disposals in tax years before 2007-08 the relevant Share Loss Relief statute was at ICTA88/S576(4). Section 576(4) defined a qualifying trading company in terms of an ‘eligible trading company’ (which does not appear in ITA07/S134) and prayed into the EIS rules at ICTA88/S293 (with certain modifications) for the meaning of this term. For EIS purposes, the requirement corresponding to the trading requirement at ITA07/S137 was at section 293(2), with further detail at section 297 corresponding to the excluded activities at ITA07/S192.

The requirement that the issuing company be a ‘qualifying trading company’, and the definition of that term based on EIS rules, was introduced to the Share Loss Relief code when it was aligned with the Enterprise Investment Scheme by Finance Act 1998. It applies to shares issued on or after 6 April 1998. Shares issued before 6 April 1998 are subject to a simpler form of the four conditions, reproduced at ITA07/SCH2/PARA38. The earlier forms of the Conditions A-D are explained under the parts of the guidance dealing with those conditions - see VCM74320 to locate the relevant guidance.