Income Tax Act 2007 section 182

Ceasing to meet trading requirement because of administration or receivership

Section 182 provides an exception to the trading requirement rules where a company enters administration or receivership, ensuring that genuine commercial restructuring does not automatically disqualify a company from meeting the trading requirement for EIS purposes.

• A company does not fail the trading requirement simply because it or a subsidiary enters administration or receivership, provided this is done for genuine commercial reasons and not primarily for tax avoidance
• Both the entry into administration or receivership and all actions taken as a consequence must satisfy the genuine commercial reasons test
• The company will, however, fail the trading requirement if it or any subsidiary is wound up or dissolved before the end of period B, unless the winding up or dissolution is itself for genuine commercial reasons and not primarily for tax avoidance
• The protection applies equally whether the company itself or any of its subsidiaries is the entity in administration or receivership