Taxes Consolidation Act 1997 section 501

Anti avoidance: qualifying investors

Section 501 counteracts mutual arrangements designed to circumvent the connected party restrictions under the employment investment incentive scheme (EIIS).

• An individual who subscribes for shares in a company with which they are not connected may nevertheless be treated as connected with that company.
• This deemed connection arises where the subscription forms part of an arrangement under which another person subscribes for shares in a different company.
• The other company must be one with which the individual, or any other party to the arrangement, is connected.
• The provision prevents investors from bypassing the connected party rules by investing in each other's companies under reciprocal arrangements.