Income Tax Act 2007 section 286B

The financial health requirement

Section 286B requires that the company issuing shares must not be "in difficulty" at the time the relevant holding is issued, in order to qualify for tax relief.

• The company must not be in financial difficulty when it issues the relevant shares
• "In difficulty" is assessed against EU guidelines on rescuing and restructuring struggling firms
• The relevant EU guidelines are those from 2004 (reference 2004/C 244/02), as they applied in the UK immediately before IP completion day
• The test is whether it is reasonable to assume the company would be regarded as a firm in difficulty under those guidelines