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 39: EIS: clarification of the definition of related person in section 291A(2)(i) of ICTA: section 168
This change eliminates a possible ambiguity in section 291A(2)(i) of ICTA as to the subsidiaries referred to in that provision.
Section 291A(1) of ICTA provides that an individual is not connected with the issuing company in some cases. But section 291A(1) does not apply in some cases involving a related person of the issuing company.
Section 291A(2)(i) of ICTA includes in the definition of “related person” in relation to the issuing company (emphasis added):
“any company of which the individual or his associate is a director and which is a subsidiary or a partner of the issuing company or of a subsidiary,…”
The emphasised words may be capable of being read as including both:
	a subsidiary of the issuing company; and
	a subsidiary of a subsidiary [of the issuing company].
Section 291A(6) of ICTA defines “subsidiary” purely in relation to the issuing company. That is an indication that the emphasised words do not extend as far as the second bullet point above. And policy and practice (see eg the guidance material in Venture Capital Schemes Manual paragraph 25060) has been to treat the emphasised words as not extending to a subsidiary of a subsidiary of the issuing company.
The words in section 168(4)(a)(i) of this Act:
“…subsidiary or partner of the issuing company, or a partner of a subsidiary of the issuing company”
represent a change in accordance with this policy and practice.