ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is adverse to some taxpayers and favourable to others in principle. But it is expected to have no practical effect as it is in line with current practice.
Change 54: EIS: information provided by the issuing company and persons connected with the issuing company in respect of certain events: section 241
This change provides a link between (i) the requirement that the issuing company and any person connected with the issuing company provide notices of certain events and (ii) the requirement that the issuing company provides information in a compliance statement (covered by section 205) of this Act. The change also gives the issuing company a longer period to provide a notice to an officer of Revenue and Customs in one particular case.
The change aligns EIS more closely with a similar provision in the corporate venturing scheme (CVS).
Section 241 of this Act is based on section 310 of ICTA. Section 310(2) of ICTA says that:
“(2)Where an event occurs by reason of which any relief in respect of any shares in a company falls to be withdrawn by virtue of section 289(1)(ba), (c) or (d), 293, 300, 302 or 303, or would fall to be withdrawn under section 300 were it not for the application of section 300A,—(a)the company; and(b)any person connected with the company who has knowledge of that matter;shall within 60 days of the event or, in the case of a person within paragraph (b) above, of his coming to know of it, give a notice to the inspector containing particulars of the event ...”
From those words it may be thought that the company and connected person are expected to know whether an individual investor has obtained EIS relief. Alternatively it may be thought that information of the specified events must be provided to the officer of Revenue and Customs (i) whether or not any investor has obtained relief and (ii) whether or not the company has provided a statement under section 306(3) of ICTA. EIS relief cannot be obtained without the issuing company having provided a statement under section 306(3) to the officer of Revenue and Customs.
Section 241(1) of this Act resolves these difficulties by tying the requirement to provide notice of the events listed to:
	the submission by the issuing company of a compliance statement; and
	a supposition that EIS relief has been obtained.
This follows paragraph 65(1) of Schedule 15 to FA 2000 (CVS).
Section 310(2) of ICTA provides for the case of a connected person having no initial knowledge of an event. The connected person is given 60 days from when that person comes to know of the event. Section 310 does not provide for the case of an issuing company having no initial knowledge of a receipt of value, under section 300 of ICTA, from a person connected to the company.
Section 241(4)(b) of this Act provides an alternative period of notice for the issuing company if the event is a receipt of value, within section 216(2), from a person connected to the company under section 221. This follows paragraph 65(4)(b)(ii) of Schedule 15 to FA 2000 (CVS).