E3.170 Replacement Value Reversing The Original Receipt

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Commentary

Personal and employment tax

Where a subscriber for EIS shares receives value from the issuing company (see E3.169), the individual can avoid the consequential reduction of EIS relief, by returning the whole of the value to the person that gave it so long as it is a qualifying receipt¹.

Terms in the legislation regarding replacement value

Term²	Definition
Original recipient	This will usually be subscriber to the EIS shares, but can be anyone receiving the original value.
Original value	This is the value received by the subscriber.
Original supplier	This will usually be the issuing company but it can be anyone from whom the subscriber receives the value.
Replacement value	This is the value of a qualifying receipt received by the original supplier from the original recipient. It must be at least the amount of the original value³.
Qualifying receipt⁴	This is where the original recipient gives to the original supplier either a payment, or a transfer of an asset at less than market value. A qualifying receipt