Revenue Tax Briefing Issue 47, April 2002
With reference to the extension of the BES until 31 December 2003 and to the increase of the company limit to €750,000 companies and practitioners should be aware of the possible application of Section 501 TCA 1997 to companies who have previously raised funds through BES and now intend to raise more.
Section 501 provides that capital repayments by a BES company to some person other than an individual claiming BES relief will result in the amount of relief due to that individual being reduced or eliminated entirely. Where it is proposed to avail of the increased company limit and raise further capital for a company through a fresh issue of BES shares, practitioners and promoters should be particularly aware of any Put and Call options already in place with previous investors. If these provide for the buy back of the shares by the BES company, then the provisions of Section 501 may come into play in respect of any new share issues following the redemption. Where a person other than the BES company purchases the shares or where the new shares are issued more than 2 years after the redemption of the other shares, Section 501 will have no effect.