Page 24 - Kavka Proposal Web

Part Four
Taxation

This general summary is based on an understanding to subscribers for qualifying shares in an EIS
of current law and practice as at the date of this qualifying company. Persons to whom shares are later
Brochure, both of which are subject to change at any transferred will not benefit. To qualify for EIS Relief,
time. It does not constitute legal or tax advice. subscribers must be individuals, or, in respect of CGT
Deferral only (see below), may be trustees of certain
POTENTIAL INVESTORS ARE, THEREFORE, STRONGLY
RECOMMENDED TO CONSULT A PROFESSIONAL kinds of trust.
ADVISER REGARDING PART 4 AND, IN PARTICULAR, ‘Qualifying Shares’
REGARDING THEIR PERSONAL TAX POSITION AND THE Qualifying shares are ordinary shares which at the
CONSEQUENCES OF MAKING AN INVESTMENT IN THE time of issue and for the following 3 years carry no
COMPANY.
present or future preferential right to dividends; assets
1. General on a winding up; or a right to be redeemed.

The Company has been established to carry on a (a) Reliefs Income Tax Relief
Qualifying Trade, which will enable the Shareholders Shareholders may deduct an amount, equal to the
to claim EIS Relief provided that they and the rate of EIS Income Tax Relief applied to the amount
Company meet all the necessary conditions.
subscribed for EIS Qualifying Shares, from their total
To obtain EIS Relief (which is described in greater liability to income tax for the tax year in which the EIS
detail below), it is necessary for investors to subscribe Qualifying Shares are issued, subject to an overall
for EIS Qualifying Shares and claim the relief. The maximum subscription of £1,000,000 per tax year.
summary below is a brief outline of the tax reliefs EIS Income Tax Relief is obtained at a rate of 30 per
available and how they operate for an additional rate cent.
taxpayer. It does not set out all the applicable rules
with which the Shareholders and the Company must In addition, investment in EIS Qualifying Shares may
comply in order for EIS Relief to be available and to be be carried back to the previous tax year to the extent
retained and investors are therefore strongly advised that the Shareholder did not utilise the full amount of
to seek independent professional advice before EIS Income Tax Relief to which he/she was entitled in
investing. EIS Relief is only available to Shareholders that year. This amount treated as carried back may
who pay UK income tax and/or wish to defer a capital not exceed the EIS income tax relief limit in respect of
gain. the previous year.
2. EIS Relief Investors should note that shares are only treated
as issued when the share application is completed
EIS Relief consists of a number of Income Tax and by entry of the shareholding in the Company’s share
Capital Gains Tax (CGT) Reliefs and is only available
register.

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