Pixel

HMRC Rules On SEIS and EIS

Gary Green
Gary Green
March 5, 2019

HMRC has strict rules for both companies seeking investment as well as for the taxpayers investing in an SEIS or EIS share issue.

For its investors to be able to claim and keep the tax reliefs relating to their shares, the company which issues the SEIS / EIS shares has to meet a number of requirements. If the company ceases to meet one or more of those conditions, investors may have their tax relief withdrawn.

For example, the maximum amount of funds that a company can raise through investments qualifying for SEIS is £150,000. Under the EIS the maximum is £5m in any 12 months with a maximum of £12m over the lifetime of the company. There are higher limits for ‘knowledge-intensive’ companies that came into effect from April 2018. There are also qualifying criteria on the maximum number of employees, trading history and the company’s gross assets.

A company looking to raise finance using both the SEIS and EIS must raise investment first using the SEIS before moving on to the EIS. However, it is possible to apply for both the SEIS and EIS at the same time. This means that once the company passes the £150,000 SEIS limit they will almost immediately be able to move on and raise additional funds of £5,000,000 or more using the EIS

One of the most important and often overlooked requirements is that in order to qualify for SEIS / EIS the company raising the finance must continue trading for at least 3 years from the time the SEIS / EIS shares were issued. This is a reasonable condition as it encourages the longer-term growth of new companies. If the company goes into liquidation, HMRC will usually not seek to claim back tax incentives from investors.

However, HMRC is clear that tax relief can be withheld, or withdrawn from investors if the company doesn’t follow the 3-year rule. For example, a start-up exit such as a third-party sale within the 3-year period. HMRC also has the power to withdraw tax relief if the investor sells their shares within the 3 year period.
Let us help you with any questions you may have via our contact form.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
Contact Form Demo (#1)
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
October 23, 2023
PAYE Investigations

Dive into the world of PAYE investigations. Uncover the facts, implications, and insights in this informative blog

September 29, 2023
London-based accountancy business acquired by Key Business Consultants

Exciting Merger Alert: London's Reed Taylor Benedict & Benedict Leff Accountants Acquired by Key Business Consultants.

September 18, 2023
Tax Tribunals – An Overview

Dive into the realm of Tax Tribunals: A comprehensive overview shedding light on this crucial aspect of taxation.

September 2, 2023
What Is A COP8?

Learn about COP8, a tax-related Code of Practice issued by HMRC for suspected tax avoidance cases. Discover when COP8s are used and the penalties associated with them.

August 20, 2023
HMRC Compliance Checks

Navigate the complexities of HMRC compliance checks confidently. Our comprehensive guide covers everything you need to know about handling tax inspections and more.

August 6, 2023
Tax Evasion and Tax Fraud

Untangling the complexities of tax evasion and fraud. Delve into our comprehensive guide to understand the differences, consequences, and preventive measures.

June 18, 2023
Which Jobs In The UK Have The Best Salary Growth Potential?

Explore the top UK jobs with the highest salary growth potential. Uncover promising career paths and industries that offer substantial earning potential.

May 23, 2023
How To File Dormant Accounts Through Companies House

Learn the step-by-step process of filing dormant accounts through Companies House with our comprehensive guide.

May 19, 2023
Customs Declaration Service (CDS) and VAT

Discover how the Customs Declaration Service (CDS) and VAT intertwine in this insightful blog article.

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
Newsletter Form (#2)
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2022 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram