Income Tax Act 2007 section 232

Acquisition of a trade or trading assets

Section 232 deals with the withdrawal of EIS income tax relief when a company acquires a trade or trading assets that were previously carried on or owned by connected persons, ensuring that relief is not available where an existing business is simply transferred into a new corporate structure.

• EIS relief is withdrawn if, during period A, the company or a qualifying subsidiary begins carrying on a trade previously operated by another entity, or acquires the greater part of the assets used in such a trade, and the investor is connected to the previous trade
• The withdrawal applies where a person or group held more than a half share in the previous trade and also holds an interest in the trade now carried on by the company, or where persons who control the company also controlled the previous trading entity
• For directors receiving reasonable remuneration for their services, the relevant time references are extended to cover any time before the end of period A, rather than being limited to times within period A
• "Trade" is defined broadly to include any business or profession, and references to a trade previously carried on include references to part of such a trade