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Finance Act 2012

Part 3 of the Schedule

109.Part 3 makes consequential amendments to ITA (and in particular to the existing EIS and VCT rules in Parts 5 and 6 of that Act) and to the TCGA 1992.

110.Paragraph 7 of the schedule amends the overview of ITA, adding a reference to the new Part 5A.

111.Paragraphs 8 and 9 amend sections 26 and 27, which form part of the computational rules for income tax liability, to add SEIS relief.

112.Paragraph 10 amends section 169, which deals with the EIS rules on directors and the circumstances in which they may qualify for relief in respect of an investment in shares. The rules are amended to allow a paid director to qualify for EIS relief where the relevant investment was made before the end of the qualifying holding period for a holding of SEIS shares which attracted relief.

113.Paragraph 12 amends the EIS rules so that any SEIS investment received by a company in the 12 months to the date of issue of EIS shares, is taken into account in determining the maximum amount of investment which will attract tax relief in that 12 month period.

114.Paragraphs 11 and 13 amend the EIS rules to add a new requirement, that before a company can issue shares qualifying under EIS it must have spent at least 70 per cent of any money raised under SEIS.

115.Paragraph 14 amends the EIS rule determining identification of shares on a disposal, to include those which have attracted SEIS relief.

116.Paragraph 16 amends the VCT rules so that any SEIS investment received by a company in the 12 months to the date of any investment by a VCT, is taken into account in determining whether a holding will form part of a VCT’s qualifying holdings.

117.Paragraphs 15 and 17 amend the VCT rules to add a new requirement, that before a company may receive a VCT investment it must have spent at least 70 per cent of any money raised under SEIS.

118.Paragraph 18 introduces amendments to the TCGA.

119.Paragraphs 19 and 20 make amendments to the rules which determine how any gain or loss on disposal of shares which have attracted EIS relief, is to be calculated. These amendments arise as a consequence of other changes in the Schedule and do not materially alter the rules.

120.Paragraph 21 amends Schedule 5B TCGA. Schedule 5B allows individuals to defer the time at which gains on disposals of assets become liable to CGT where they invest in shares under the terms of the main EIS. The amendments made by paragraph 21 ensure that both EIS deferral and SEIS re-investment relief cannot be claimed in respect of the same expenditure.

121.Paragraph 22 amends section 98 of the Taxes Management Act (TMA) 1970 to include the information obligations provided for by sections 257GE, 257GF, 257GG and 257GH. Section 98 lists those information obligations which may carry a penalty if not complied with.

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