Income Tax Act 2007 section 292AB

Maximum risk finance investments during the 5-year post-investment period requirement

Section 292AB imposes a cap on the total amount of risk finance investments a company (and its group) may have received, measured throughout the five-year period following the date shares are issued under the EIS scheme, where particular trade-acquisition or trade-transfer events occur during that period.

• The requirement is triggered when a company carrying on a pre-existing trade becomes a 51% subsidiary of the relevant company during the five-year post-investment period, or when a trade funded by the share issue becomes a "relevant transferred trade" during that period
• At every point during the five-year post-investment period, total relevant investments in the relevant company and its connected entities must not exceed £20 million for knowledge-intensive companies or £12 million for all other companies
• Relevant investments include those made in current or former 51% subsidiaries and investments whose proceeds funded trades that were later transferred into the group, with proportional adjustments where only part of the funds were used for a transferred trade
• If a compliance statement reveals that the requirement was not met, the requirement is nevertheless treated as satisfied for the period from the investment date until the date the compliance statement was provided