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Companies are able to apply for HMRC Advance Approval 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. 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.
How To Get Your SEIS Income Tax Relief
You have to submit a completed form, known as the SEIS1, to HMRC for formal approval (whether or not you've tried to get advance approval). You can't submit the form 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.
You can usually claim tax relief in the tax year the investment is made, or carried back one year. Or you can claim relief for up to five years after the 31st of January following the tax year in which you made the investment.