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EIS relief and the connection by employment rule

If an individual wanted to invest in an EIS qualifying company would they be restricted from doing so if they were contracted to provide services to (not employed by) that company?

The HMRC guidance mentions that you are "connected by employment...if you are a partner, director...or an employee of the company". What does the "partner" criteria mean? If it covers suppliers / contractors then it seems a bit odd to be covered by the "connected by employment" umbrella.

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17th Apr 2012 12:26

ITA2007 Part 5 refers

If that is what HMRC guidance is saying then it is confusing.

s167 ITA2007 says an individual is connected if the individual is:

an employeea partnera director

of the issuing company (also of subsidiary of the issuing company and others, but the main one is the issuing company).

There are other sections that apply, but, from what you have described an individual providing services that are not under a contract of employment would not fall within the "no connection" condition found in s162 ITA2007.

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