Taxation of Chargeable Gains Act 1992 Schedule 5B paragraph 13

Value received by investor

Paragraph 13 of Schedule 5B deals with the consequences for EIS reinvestment relief when an investor receives value from the company during the period of restriction, and defines what constitutes receiving value and what payments are excluded.

• If an investor receives more than insignificant value from the EIS company during the period of restriction, the shares lose their eligibility for deferral relief — either retrospectively if the value was received on or before the issue date, or from the date the value was received if after issue
• Receiving value includes a wide range of transactions such as share buybacks, debt repayments, loans, benefits, asset transfers at non-market value, and any non-qualifying payments made by the company or persons connected with it
• Multiple individually insignificant receipts of value are aggregated, and if the total is no longer insignificant, the investor is treated as having received that aggregate amount at the time of the latest receipt
• Certain routine commercial payments — including reasonable employee remuneration, normal dividends, market-value transactions, commercial interest, and ordinary trade debts — are excluded as qualifying payments and do not count as receiving value