Income Tax Act 2007 section 257QR

Acquisition of share capital

Section 257QR provides for the withdrawal of Social Investment (SI) tax relief where the social enterprise acquires all the share capital of another company and the investor was involved in controlling both entities.

• SI relief is withdrawn if the social enterprise acquires all the issued share capital of another company during the longer applicable period, and the investor (alone or with others) controlled both the social enterprise and that other company during the same period
• This rule prevents individuals from gaining SI relief on what is essentially a restructuring of existing interests rather than genuine new investment
• Where the investor is a paid director of the social enterprise (or a qualifying subsidiary or partner company) receiving reasonable remuneration for services, the test for control of the other company is extended to cover any time before the end of the longer applicable period, rather than being limited to times within it
• For these purposes, a director who is also an employee is treated as a director, and remuneration includes any benefit or facility of any kind