14 EIS, SEIS and VCT reliefs: risk to capital
Finance Act 2018 (2018 c 3) | Legislation

Investments

14  EIS, SEIS and VCT reliefs: risk to capital

(1)     In Part 5 of ITA 2007 (enterprise investment scheme)—

(a)     in section 157 (eligibility for EIS relief), in subsection (1), before paragraph (a) insert—

“(za)     the risk-to-capital condition is met (see section 157A),”, and

(b)     after that section insert—

“157A Risk-to-capital condition

(1)     The risk-to-capital condition is met if, having regard to all the circumstances existing at the time of the issue of the shares, it would be reasonable to conclude that—

(a)     the issuing company has objectives to grow and develop its trade in the long-term, and

(b)     there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.

(2)     For the purposes of subsection (1)(b)—

(a)     the risk is to be determined by reference to a loss of capital, and the net investment return, for the investors generally,

(b)     the reference to a loss of capital is to a loss of some or all of the amounts subscribed for the shares by the investors, and

(c)     the reference to the net investment return is to the net investment return to the investors

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