Income Tax Act 2007 section 173AA

Maximum risk finance investments at the issue date requirement

Section 173AA imposes a lifetime cap on the total amount of risk finance investments that a company (and its subsidiaries) may have received by the date on which Enterprise Investment Scheme shares are issued.

• The total relevant investments received by the issuing company and its group on or before the share issue date must not exceed £12 million, or £20 million if the company qualifies as a knowledge-intensive company.
• Relevant investments include those made in the issuing company itself, in any current or former 51% subsidiary of the issuing company, and in other companies where the funds were used for a trade carried on by such a subsidiary.
• Investments in other companies also count if the funded trade was subsequently transferred to the issuing company, a 51% subsidiary, or a partnership involving either, making it a "relevant transferred trade" — and where only part of the investment funded such a trade, only the corresponding proportion counts.
• Once a company ceases to be a 51% subsidiary, investments made in it after that point, and trades transferred to it after that point, are excluded from the calculation.