Income Tax Act 2007 section 225

Insignificant repayments ignored for purposes of section 224

Section 225 provides an exception to the EIS relief withdrawal rules in section 224, allowing insignificant share capital repayments to other persons to be disregarded in certain circumstances.

• A repayment of share capital is ignored if both the market value of the shares involved and the amount received by the member are insignificant compared to the market value of the company's remaining issued share capital immediately after the event
• For the purposes of this test, the shares to which the repayment relates (the "target shares") are assumed to have been cancelled at the time the repayment is made
• The insignificance exception does not apply if "repayment arrangements" existed at any time during the 12 months before the issue of the relevant EIS shares up to and including the issue date
• "Repayment arrangements" means any arrangements providing for a repayment by the issuing company or any subsidiary, or entitling anyone to such a repayment, at any time during period C relating to the relevant shares