Income Tax Act 2007 section 185

The control and independence requirement

Section 185 sets out the control and independence conditions that a company issuing shares under the Enterprise Investment Scheme must satisfy throughout period B in order for the shares to qualify for EIS relief.

• The issuing company must not control any company that is not a qualifying subsidiary, whether acting alone or together with connected persons, at any time during period B.
• The issuing company must not be a 51% subsidiary of another company, nor be under the control of another company (alone or with connected persons), at any time during period B.
• No arrangements may exist at any time during period B that could cause the issuing company to breach either the control element or the independence element, whether during that period or at any future point.
• These requirements are subject to the share exchange provisions in section 247(4), which allow continuity of EIS relief when the issuing company is acquired by a new company.