Search Legislation

Finance Act 2018

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes over time for: Section 14

 Help about opening options

Alternative versions:

Changes to legislation:

There are currently no known outstanding effects for the Finance Act 2018, Section 14. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

14EIS, SEIS and VCT reliefs: risk to capitalU.K.

(1)In Part 5 of ITA 2007 (enterprise investment scheme)—

(a)in section 157 (eligibility for EIS relief), in subsection (1), before paragraph (a) insert—

(za)the risk-to-capital condition is met (see section 157A),, and

(b)after that section insert—

157ARisk-to-capital condition

(1)The risk-to-capital condition is met if, having regard to all the circumstances existing at the time of the issue of the shares, it would be reasonable to conclude that—

(a)the issuing company has objectives to grow and develop its trade in the long-term, and

(b)there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.

(2)For the purposes of subsection (1)(b)—

(a)the risk is to be determined by reference to a loss of capital, and the net investment return, for the investors generally,

(b)the reference to a loss of capital is to a loss of some or all of the amounts subscribed for the shares by the investors, and

(c)the reference to the net investment return is to the net investment return to the investors (whether by way of income or capital growth) taking into account the value of EIS relief.

(3)For the purposes of subsection (1) the circumstances to which regard may be had include—

(a)the extent to which the company's objectives include increasing the number of its employees or the turnover of its trade,

(b)the nature of the company's sources of income, including the extent to which there is a significant risk of the company not receiving some or all of the income,

(c)the extent to which the company has or is likely to have assets, or is or could become a party to arrangements for acquiring assets, that could be used to secure financing from any person,

(d)the extent to which the activities of the company are sub-contracted to persons who are not connected with it,

(e)the nature of the company's ownership structure or management structure, including the extent to which others participate in or devise the structure,

(f)how any opportunity for investment in the company is marketed, and

(g)the extent to which arrangements are in place under which opportunities for investments in the company are or may be marketed with, or otherwise associated with, opportunities for investments in other companies or entities.

(4)If the issuing company is a parent company—

(a)any reference in this section to the company's trade is to what would be the trade of the group if the activities of the group companies taken together were regarded as one trade, and

(b)any reference in subsection (3)(a) to (e) to the company is to any group company.

(2)In Part 5A of ITA 2007 (seed enterprise investment scheme)—

(a)in section 257AA (eligibility for SEIS relief), before paragraph (a) insert—

(za)the risk-to-capital condition is met (see section 257AAA),, and

(b)after that section insert—

257AAARisk-to-capital condition

(1)The risk-to-capital condition is met if, having regard to all the circumstances existing at the time of the issue of the shares, it would be reasonable to conclude that—

(a)the issuing company has objectives to grow and develop its trade in the long-term, and

(b)there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.

(2)For the purposes of subsection (1)(b)—

(a)the risk is to be determined by reference to a loss of capital, and the net investment return, for the investors generally,

(b)the reference to a loss of capital is to a loss of some or all of the amounts subscribed for the shares by the investors, and

(c)the reference to the net investment return is to the net investment return to the investors (whether by way of income or capital growth) taking into account the value of SEIS relief.

(3)For the purposes of subsection (1) the circumstances to which regard may be had include—

(a)the extent to which the company's objectives include increasing the number of its employees or the turnover of its trade,

(b)the nature of the company's sources of income, including the extent to which there is a significant risk of the company not receiving some or all of the income,

(c)the extent to which the company has or is likely to have assets, or is or could become a party to arrangements for acquiring assets, that could be used to secure financing from any person,

(d)the extent to which the activities of the company are sub-contracted to persons who are not connected with it,

(e)the nature of the company's ownership structure or management structure, including the extent to which others participate in or devise the structure,

(f)how any opportunity for investment in the company is marketed, and

(g)the extent to which arrangements are in place under which opportunities for investments in the company are or may be marketed with, or otherwise associated with, opportunities for investments in other companies or entities.

(4)If the issuing company is a parent company—

(a)any reference in this section to the company's trade is to what would be the trade of the group if the activities of the group companies taken together were regarded as one trade, and

(b)any reference in subsection (3)(a) to (e) to the company is to any group company.

(3)In Part 6 of ITA 2007 (venture capital trusts)—

(a)in section 286 (qualifying holdings), in subsection (3), before paragraph (za) insert—

(1za)risk to capital (see section 286ZA),, and

(b)before section 286A insert—

286ZAThe risk-to-capital requirement

(1)The requirement of this section is that, having regard to all the circumstances existing at the time of the issue of the relevant holding, it would be reasonable to conclude that—

(a)the relevant company has objectives to grow and develop its trade in the long-term, and

(b)there is a significant risk that, for the investing company, there will be a loss of capital of an amount greater than its net investment return.

(2)For the purposes of subsection (1)(b)—

(a)the reference to a loss of capital is to a loss of some or all of the amounts given in consideration for the relevant holding, and

(b)the reference to the net investment return is to the net investment return to the investing company irrespective of whether the return takes the form of income, capital growth, fees or other payments or anything else.

(3)For the purposes of subsection (1) the circumstances to which regard may be had include—

(a)the extent to which the company's objectives include increasing the number of its employees or the turnover of its trade,

(b)the nature of the company's sources of income, including the extent to which there is a significant risk of the company not receiving some or all of the income,

(c)the extent to which the company has or is likely to have assets, or is or could become a party to arrangements for acquiring assets, that could be used to secure financing from any person,

(d)the extent to which the activities of the company are sub-contracted to persons who are not connected with it,

(e)the nature of the company's ownership structure or management structure, including the extent to which others participate in or devise the structure,

(f)how any opportunity for investment in the company is marketed, and

(g)the extent to which arrangements are in place under which opportunities for investments in the company are or may be marketed with, or otherwise associated with, opportunities for investments in other companies or entities.

(4)If the relevant company is a parent company—

(a)any reference in this section to the company's trade is to what would be the trade of the group if the activities of the group companies taken together were regarded as one trade, and

(b)any reference in subsection (3)(a) to (e) to the company is to any group company.

(4)The amendments made by this section come into force in accordance with provision made by the Treasury by regulations.

(5)Regulations under subsection (4)—

(a)may make different provision for different purposes;

(b)may provide for any of those amendments to have effect in relation to shares, or shares or securities, issued on or after a day that is—

(i)earlier than the day on which the regulations are made, but

(ii)not earlier than the day on which this Act is passed.

Commencement Information

I1S. 14(1)(2) in force at 15.3.2018 for the purposes of the amendments made by those subsections by S.I. 2018/931, reg. 2(a)

I2S. 14(3) in force at 15.3.2018 for the purposes of the amendments made by that subsection by S.I. 2018/931, reg. 2(b)

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources