March 21, 2018
Article
As one might expect, when the government is providing valuable tax relief, there are inevitability a number of strings attached.
I won’t run through the numerous conditions to be met by the company but the age, size and trading activities are the key areas where a company may fall short.
Age
If seven years have passed (ten for knowledge-intensive companies) since the first commercial sale, the company must have already issued shares which qualify under a number of regimes including S/EIS.
Size
The company’s gross assets must not exceed £15m before the share issue and £16m following the share issue. It must also not have more than 250 full-time equivalent staff or 500 if knowledge-intensive.
Trading activities
The following activities if undertaken to a substantial extent will result in the company not qualifying for EIS.
- dealing in land, commodities, futures, shares, securities or other financial instruments;
- dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
- banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
- leasing;
- receiving royalties or licence fees;
- providing legal or accountancy services;
- property development;
- farming or market gardening;
- holding, managing or occupying woodlands, any other forestry activities or timber production;
- shipbuilding;
- producing coal or steel;
- operating or managing hotels or comparable establishments;
- operating or managing nursing homes or residential care;
- generating or exporting electricity or making electricity generating capacity available;
- generating heat, or any form of energy;
- producing gas or fuel;
- provision of services by one company to another which undertakes one of the above activities and which is controlled by the same person.