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The purpose of EIS is to help small, unquoted trading companies raise finance that may be difficult to raise without a tax incentive for the investor. In consequence, its rules are designed to assist those companies are in need of growth and development, and discourage established groups of companies from raising EIS finance.

There are a number of conditions imposed upon the issuing company if it is to be a qualifying company for EIS purposes (see E3.116). One of these conditions looks to the extent that other group companies are controlled by, or exert control on, the issuing company.

The control element of this condition examines the control imposed by the issuing company, whilst the independence element examines how much control is imposed upon the issuing company by other group members.

The Treasury has the power to amend the provisions as it considers appropriate¹.