Enterprise Investment Scheme (EIS)

We spend a lot of time looking at EIS issues and have a working knowledge of the beartraps that can – and frequently do – cause relief to be forfeited. Sadly, there are many reasons for this, whether by failing to qualify from the outset or by doing something later that causes the relief to be withdrawn.

As a consequence of our combined experience, we are well placed to guide companies and investors through the maze of legislation and guidance. Please see a summary of the provisions in our Briefing Note as a general guide.

However, we go much further than general guidance; we will work with you to understand the history, as well as current overall planning on funding, to make sure this is as tax efficient as possible. Understanding this is very important when it comes to navigating EIS. Here are a few examples of what you need to know:

• Do you know how to calculate the over-arching 30% test including connected parties? For EIS purposes, parents and descendants are connected and taken into account but siblings and in-laws are not
• Were you aware that (almost) any shareholder holding shares that do not qualify for EIS can never make an EIS qualifying investment in that same company?
• Did you know there is a huge difference in terms of effect on EIS relief on repayment of a loan depending on whether it was made before or after the EIS share subscription?

It is important to seek advice well before money is raised; we can help with structuring and qualification review and then assist with obtaining advance assurance of qualification from HMRC.

Once the funds are raised, we can handle or advise on the tax compliance obligations – a lot of electronic forms (which cannot easily be part completed and saved!) – with HMRC and ultimately with providing certification to investors.

Once that is done, we would aim to work with you over the next growth phase of the business, reviewing your plans and testing the impact on existing investors.

Ultimately, we would hope to help you achieve the exit you want with your investors achieving their tax-free exit.

EIS Briefing Note >