Income Tax Act 2007

The requirements U.K.

163 The no connection with the issuing company requirement U.K.

(1) The investor must not be connected with the issuing company (whether before or after its incorporation) at any time during the period—

(a) beginning two years before the issue of the shares, and

(b) ending immediately before the termination date relating to the shares.

(2) This is subject to section 169(1).

164 The no linked loans requirement U.K.

(1) No linked loan is to be made by any person, at any time in period A, to the investor or an associate of the investor.

(2) In this section “linked loan” means any loan which—

(a) would not have been made, or

(b) would not have been made on the same terms,

if the investor had not subscribed for the relevant shares, or had not been proposing to do so.

(3) References in this section to the making by any person of a loan to the investor or an associate of the investor include references—

(a) to the giving by that person of any credit to the investor or any associate of the investor, and

(b) to the assignment to that person of a debt due from the investor or any associate of the investor.

[F1 164A The existing shareholdings requirement U.K.

(1) If, at the time the relevant shares are issued, the investor holds any other shares in a company within subsection (2) (“C”), those other shares must be—

(a) a risk finance investment, or

(b) subscriber shares which—

(i) were issued to, and have since they were issued been continuously held by, the investor, or

(ii) were acquired by the investor at a time when C had not issued any shares other than subscriber shares and had not begun to carry on or make preparations for carrying on any trade or business.

(2) The companies referred to in subsection (1) are—

(a) the issuing company, and

(b) any company which is a qualifying subsidiary of the issuing company at the time the relevant shares are issued.

(3) Shares in a company are a “risk finance investment” if—

(a) they are issued by the company to the investor, and

(b) (at any time) the company provides a compliance statement under section 205, 257ED or 257PB in respect of the issue of shares which includes those shares.]

Textual Amendments

F1 S. 164A inserted (with effect in accordance with Sch. 5 para. 23 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 5 para. 4

165 The no tax avoidance requirement U.K.

The relevant shares must be subscribed for by the investor for genuine commercial reasons, and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.