The requirement for a company to have a ‘new qualifying trade’ (i.e. trading for less than two years) in order to qualify under SEIS is now fairly well trodden ground.
Less well trodden is the new requirement for EIS qualifying companies to have commenced trading (had first commercial sale) within the past seven years (there is an extension to 10 years for knowledge intensive companies). This applies to EIS shares issued from 18 November 2015.
There are various potential exclusions to this rule, but particularly pernicious are the rules related to groups – what about this for an example:
Company E was incorporated on 1 February 2016. It used private investments to acquire the issued share capital of company F on 1 March 2016.
Company F was incorporated on 1 February 2014 to trade as a brewery. Its first commercial sale was made on 1 June 2014. On 1 March 2015 company F acquired a pub which had started to trade on 1 April 2005.
Company E’s first commercial sale was therefore on 1 April 2005 and it does not meet the basic age condition
Seems fairly tenuous and serves to show just how careful companies will need to be in carrying out their due diligence regarding their qualifying status under EIS prior to issuing shares.