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 38: EIS: individuals connected with issuing company: section 166
This change makes it explicit when the definition of an individual being connected with the issuing company applies.
Section 291(2) of ICTA applies the definition solely for section 291 of that Act. But the expressions in section 291A(5)(b)(i) of ICTA:
“[at time when he had never been] connected with the issuing company”
and section 291B(5) of ICTA:
“that or any other individual who is a party to the arrangement is connected”
also depend on whether an individual is connected with the issuing company (or is not connected with the issuing company).
It might be thought that sections 291A(5)(b)(i) and 291B(5) of ICTA use some alternative meaning of an individual being connected with the issuing company. But it is not obvious what alternative meaning would apply for these provisions or why any alternative is needed. Also section 312(2) of ICTA provides that the definition of “connected persons” in section 839 of ICTA, rewritten in section 993, does not apply to sections 291, 291A(1), (4) and (5) and 291B of ICTA. So there is a strong indication that the definition of “connected” in section 291 applies to sections 291A(5) and 291B(5).
Section 166(1) of this Act applies the definition of “connected with the issuing company” to Chapter 2 of Part 5 of this Act with the exception of section 168(4). This means that the definition of an individual being connected to the issuing company also applies to sections 169(3)(a) and 171 (deriving from sections 291A(5)(b)(i) and 291B(5) of ICTA respectively). Section 166(2) provides a signpost to section 257(2) of this Act which explains what definition of connection applies in section 168(4).