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EIS Investments which go bust.

EIS investments which are no longer eligable for tax relief despite claiming it in previous tax year

I have a client who has a large portfolio of EIS investments of which I have claimed tax relief and CGT deferral relief in previous tax years. One of the holdings has now been liquidated. The shares have only been owned for just over 1 year.

Am I correct in thinking that because this is a liquidation the tax relief is still intact and the loss relief of 70% of the value can be claimed in the year the company was liquidated.

Secondly will the capital gains deferral mean that a capital gain is created equal to the amount initially deferred and this will be a capital gain in the same year of the liquidation?

Thanks in advance for your help.



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18th Aug 2017 09:32

Income tax relief equal to the amount invested less the relief already given under EIS.

The deferred capital gain comes back into charge in the year of liquidation, IIRC.

Thanks (2)
18th Aug 2017 09:35

That is my understanding. see S182 ITA2007 confirming the position that relief is not withdrawn when a company enters receivership or administration for genuine commercial reasons.

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to firecodeblue
18th Aug 2017 16:40

Clawback of income tax relief is restricted to the amount of loss, so if the shares become worth nothing you pay nothing back, if you sold the shares at a 50% loss you would pay back 50% of the relief etc.

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18th Aug 2017 15:11


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