Readers’ forum: Enterprise investment scheme

In 2019-20 my client invested £25 000 in companies that qualified for enterprise investment scheme (EIS) relief. The managing company spread the money between ten qualifying companies.

In January 2021 my client received a letter from the managing company saying that one of the companies had been bought by a company that was not eligible for EIS relief. He would thus have to repay to HMRC the tax refund on that investment. In the event the company was sold at a profit so he has not lost anything except nine months of the three years to make the investment eligible for inheritance tax relief.

If the managing company had immediately reinvested the funds in another EIS qualifying company would there have been any carry forward of the relief and continuity of the investment for inheritance tax relief purposes?

I hope Taxation readers can advise.

Query...