The measure

HMRC have changed their interpretation on the availability of enterprise investment scheme (EIS) reliefs where the company concerned trades through a partnership. Reliefs will no longer be available for investment in such companies.

A condition for relief is that at no time in the three year period following the issue of the EIS shares is the qualifying trade carried on by a person other than the issuing company or a 90% subsidiary of the issuing company. Until today HMRC have accepted that a company that is a member of a trading partnership can qualify for EIS reliefs.

HMRC's new view is that because the other partners also carry on the trade, the investment does not meet the qualifying conditions.

Who will be affected?

The measure affects investors investing in EIS companies.

When?

Where HMRC have issued a certificate of compliance with the EIS conditions before today, investors will be unaffected. Where investors have been issued with shares but a certificate of compliance has not yet been issued, HMRC will issue a certificate if the company has applied for and received advanced assurance that its activities will qualify for EIS relief in relation to that issue of shares. Such shareholders will qualify for relief.

Other investors in companies carrying on their trade through a partnership will not qualify for relief.