HMRC helpfully offers companies the facility to apply for advance assurance that a proposed issue of shares will qualify for SEIS relief.
This advance assurance although not mandatory is important for both the company and even more so for the prospective investor.
There are many risks in investing in early-stage potentially high growth businesses and at the very least investors want to know that their investments will benefit from the advertised tax breaks. This is very difficult without advanced assurance for the SEIS in place. At Key Business Consultants we offer advanced assurance checks as standard within our SEIS consultancy and compliance services throughout the three year investment period so that you know that you can ask us any question.
The advance assurance facility is offered by a section of HMRC known as the Small Companies Enterprise Centre (SCEC). Companies can submit details of their plans to raise money, their structure, and their activities in advance of an issue of shares and the SCEC will advise on whether or not the proposed share issue is likely to qualify for relief.
However, even with advance assurance, there are some other steps the company must follow before investors can claim tax relief on their investments. A completed form, known as the SEIS1 must be submitted to HMRC for formal approval. The submission of this form is required whether or not advance approval had been sought. This form cannot be submitted until either
- The company has been trading for at least four months or,
- If not yet trading, it has spent at least 70% of the monies raised by the SEIS.
Once the SCEC has reviewed the form and confirmed that the company has met the requirements of SEIS, the SCEC will issue claim forms known as SEIS3s which are then sent to each investor via the investor company for completion. In turn, the investor must complete the SEIS3 form, usually as part of his / her annual self-assessment tax return. Tax relief is usually claimed in the same tax year the investment is made or carried back one year, but relief can be claimed for up to five years after the 31 of January following the tax year in which the investment was made.