Income Tax Act 2007 section 167

Employees, directors and partners

Section 167 defines when an individual is treated as "connected" with the issuing company by reason of being an employee, director or partner, which is relevant to whether Enterprise Investment Scheme relief is available.

• An individual is connected with the issuing company if they are an employee, partner or director of that company, any of its 51% subsidiaries, or (in the case of employees and directors) a company that is a partner of the issuing company or its subsidiaries.
• A "subsidiary" for these purposes means any company that is a 51% subsidiary of the issuing company at any point during period A, regardless of whether it holds that status at the time the individual actually occupies the relevant role.
• The director connection is subject to exceptions in sections 168 and 169, which can allow certain directors to qualify for EIS relief despite being connected.
• Where an individual is both a director and an employee of the same company, they are treated as a director rather than an employee, and references to their role as director include their employee capacity — ensuring that any employee remuneration is taken into account when applying the director exceptions.

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