Income Tax Act 2007 section 257QE

When value is received

Section 257QE defines the circumstances in which an investor is treated as having received value from a social enterprise, for the purposes of the rules on withdrawal or reduction of Social Investment (SI) tax relief.

• An investor receives value when the social enterprise repays, redeems or repurchases investments, repays connected debts, releases liabilities, makes loans or advances, provides below-market benefits or facilities, transfers assets at off-market prices, or makes most other payments to the investor.
• Value is also received where the investor gets a payment or asset on a genuine commercial winding-up or dissolution, or where a connected person who would not independently qualify as an eligible investor purchases the investor's investments or pays for the surrender of investment rights.
• An investor is not treated as receiving value merely because SI relief is withdrawn or reduced on a disposal of the investments, nor because they receive reasonable remuneration for services as a director or employee of the social enterprise.
• An "ordinary trade debt" — meaning a debt for goods or services supplied in the normal course of business with credit of no more than six months and no longer than is normal for that business's customers — is generally excluded from the value received rules.