ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in taxpayers’ favour in principle. But it is expected to have no practical effect as it is in line with current practice.
Change 40: EIS: carrying on qualifying business activity for four months is a condition of eligibility for EIS relief rather than a condition for claiming it: section 176
This change makes the requirement, that the qualifying business activity is to be carried on for a certain minimum period, one of the conditions that must be met in order for an individual to be eligible for EIS relief. In ICTA the corresponding requirement is a condition that must be met in order for an individual to claim EIS relief.
Section 289(1) of ICTA contains a number of conditions that must be met in order for an individual to eligible for relief. The opening words of section 289(1) say that an individual:
“…is eligible for relief… if…”
Section 289A(6) and (7) of ICTA then contains additional conditions that must be met before the individual may claim the relief for which that individual is eligible. Section 289A(6) says that a:
“…claim for relief … shall not be allowed unless….”
This distinction in ICTA seems to be a legacy of the scheme in Chapter 2 of Part 4 of FA 1981 (relief for investment in new corporate trades) where:
	there had to be a new company;
	there had to be a new trade; and
	no claim could be made to the Inland Revenue (for it to give effect to the relief) until the tax year following that in which the shares were issued.
There is no reason for the enterprise investment scheme to split conditions between (a) those that must be met to be eligible for relief and (b) those that must be met to claim relief.
Section 176(1) of this Act removes this split by making the requirement, that the qualifying business activity be carried on for a certain minimum period, an additional condition of eligibility for EIS relief. Section 202(1)(a) (time for making claims for EIS relief) preserves the position that claims may not be made until the qualifying business activity has been carried on for the required period.