Income Tax Act 2007 section 176

The minimum period requirement

Section 176 sets out the minimum period for which a qualifying business activity must have been carried on before or around the time shares are issued under the Enterprise Investment Scheme (EIS), and provides concessions where that period is cut short by genuine corporate insolvency events.

• Where the money raised is for a qualifying trade, that trade must have been carried on for at least 4 months ending at or after the date of the share issue, by the issuing company or its qualifying 90% subsidiary and by no one else.
• Where the money raised is wholly or partly for qualifying research and development, the same 4-month minimum period and same exclusivity rules apply to that research and development activity.
• If the 4-month period is cut short solely because the issuing company or another company is wound up or dissolved, the shorter period is accepted provided the winding up or dissolution is for genuine commercial reasons and is not part of a tax avoidance scheme.
• The same concession applies where the shorter period results solely from the issuing company or another company entering administration or receivership, again provided this is for genuine commercial reasons and not part of a tax avoidance arrangement.