Taxes Consolidation Act 1997 section 508P

Anti-avoidance: qualifying investor receiving value from the company

Section 508P provides for the reduction or withdrawal of EIIS relief where an investor receives value from the qualifying company during the compliance period.

• An investor receives value from a qualifying company in a wide range of circumstances, including share buybacks, debt repayments, loans, asset transfers at undervalue or overvalue, benefits or facilities, and the release or waiver of liabilities owed by the investor.
• Certain payments are excluded from the definition of receiving value, notably ordinary trade debts with credit terms not exceeding six months, genuinely new debts incurred after the shares were subscribed for, reasonable remuneration, normal dividends, commercial-rate loan interest, and reimbursement of expenses.
• Where value is received during the compliance period, the investor's relief is reduced by the amount of that value, with the reduction applied to shares issued earlier before shares issued later.
• A share redemption or buyback will not trigger a reduction in relief provided the most recent qualifying investment in the RICT group was more than 18 months before the redemption, no further qualifying investment is made within 12 months after it, and the investor makes no qualifying investment in the RICT group within five years after the redemption.