Income Tax Act 2007 section 216

When value is received

Section 216 defines the circumstances in which an investor is treated as having received value from an issuing company for EIS relief purposes, and specifies the timing of that receipt.

• Value is received when the issuing company repays, redeems or repurchases its own share capital or securities held by the investor, repays certain debts, waives liabilities, makes loans or advances, provides benefits, transfers assets at undervalue or overvalue, or makes other payments outside specified exceptions.
• A liability is treated as waived if it is not discharged within 12 months of when it ought to have been, and debts owed by the investor to the company or assigned to the company from a third party are treated as loans from the company to the investor.
• Value is also received where the investor receives payments or assets on a winding up or dissolution that does not involve tax avoidance, or where a person connected with the company purchases the investor's shares or securities or pays the investor for giving up related rights.
• Disposals of shares where EIS relief is already withdrawn or reduced, reasonable directors' remuneration, and ordinary trade debts with credit terms of no more than six months are excluded from the value received rules.