Income Tax Act 2007 section 257MIA

The financial health requirement

Section 257MIA requires that a social enterprise must not be in financial difficulty at the point when the investment is made, as a condition for qualifying for social investment tax relief.

• The social enterprise must satisfy the financial health requirement at the beginning of the shorter applicable period.
• The financial health requirement means that the social enterprise must not be "in difficulty".
• "In difficulty" is assessed by reference to the EU Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02).
• If it is reasonable to assume the enterprise would be regarded as a firm in difficulty under those guidelines, it fails the requirement.