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EIS relief options on a reinvestment from a collective company fund.
My client company has raised money for a trading venture under the enterprise investment scheme (EIS). It raised £500 000 from five investors who each contributed £100 000.
Two of the investors are not UK resident and therefore they did not qualify for EIS relief. Of the total amount £350 000 has already been invested in the business and the company has generated net income of £150 000 from trading leaving £300 000 in the company’s bank account.
Pending them obtaining tax repayments for the EIS relief two of the UK resident investors have suggested that the company should make a short-term loan of £100 000 to another corporate venture that they are starting. Clearly this is using money that the company has otherwise than for the purposes of the trade.
My questions are as follows.
- Given that all the money...
