Part 5Enterprise investment scheme

Chapter 6Withdrawal or reduction of EIS relief

Disposals

209Disposal of shares

(1)

This section applies if—

(a)

the investor disposes of any of the relevant shares,

(b)

the disposal takes place before period A ends, and

(c)

EIS relief is attributable to the shares.

(2)

If the disposal is not made by way of a bargain made at arm's length, the EIS relief attributable to the shares must be withdrawn.

(3)

If the disposal is made by way of a bargain made at arm's length, the EIS relief attributable to the shares must—

(a)

if it is greater than the amount given by the formula set out below, be reduced by that amount, and

(b)

in any other case, be withdrawn.

The formula is— F1

R×EISRmath

where—

R is the amount or value of the consideration received by the investor for the shares, and

F2EISR is the EIS rate.

(4)

This section does not apply to a disposal of shares to which an amount of EIS relief is attributable if—

(a)

the disposal was made by an individual (“A”) to another individual (“B”), and

(b)

A and B were married to, or were civil partners of, each other and living together at the time of the disposal.

(5)

Section 246 contains rules for determining which shares of any class are treated as disposed of for the purposes of this section if the investor disposes of some but not all the shares of that class which are held by the investor.