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bigduckontax, Accountant
Category: Tax
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Client (Limited Company) has 4 shareholders, 2 of whom are

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Client (Limited Company) has 4 shareholders, 2 of whom are directors. 25%, 25%, 25% and 25% ordinary shares each from incorporation.
All shareholders are as such: husband and wife & husband and wife.
Outside of the initial share capital, loans have been made into the company by the 2 husbands who are not directors.
Can these loan amounts be used to pay for new issue shares in the company and then EIS applied for?
I do not feel so as in effect due to their wives being director shareholders then they have entitlement to more than 30% control.
Both husband 25% shareholders are happy convert their loans into capital but question is 'if' there could be any EIS relief applied for?

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Only with the consent of both the lenders; if one declines then the shareholding proportions will be skewed. EIS is only available if the company has been trading for less than 2 years.

Customer: replied 4 months ago.
Hi, it is more around if the EIS would be available.
Even with all parties agreed, I feel the application for EIS on these new shares would be rejected as it would mean that both husbands will have more than 30% and be connected as their wife are each also shareholders so for the purposes of EIS we should consider husband and wife shareholders connected and therefore combine their holdings into one value for the purposes of testing the 30% test for EIS?

I am of the opinion that EIS is a dead duck here.

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Thank you for your suport.