Pixel

SEIS Changes - January 2020

Gary Green
Gary Green
January 24, 2020

Key Business Consultants was founded as an SEIS tax specialist firm, so we always stay on top of the latest SEIS changes.

Last week the government introduced some new SEIS changes. In today's article, we'll tell you exactly what you need to know.

Qualifying Conditions for SEIS

As SEIS experts, we've always recommended the scheme to our clients as a great way to raise funds quickly and tax-efficiently.

However, there are some qualifying conditions that you have to meet in order to use the scheme. In particular, the shares that are issued:

  • must be subscribed for cash
  • mustn't be issued in consideration for debt
  • must be fully paid up

This can be a problem if the investment is part of a "bridging round" where the shares won't be formally valued until a later round of funding.

Advance Subscription Agreements

The official documentation from HMRC concerns something called Advance Subscription Agreements (ASAs).

An ASA allows you to invest in a company well before you receive your shares. It's a way for the company to raise money as quickly as possible. This can be especially helpful when the company is young and can't value its shares accurately.

It's typically a fairly simple agreement, but it's important to follow the rules.

Advanced Assurance

HMRC has always offered something called advanced assurance.

Companies can submit details of their plans to raise money, their structure, and their activities in advance of an issue of shares. Then a body called the Small Companies Enterprise Centre (SCEC) will advise on whether or not the proposed share issue is likely to qualify for relief.

Until this month, HMRC hasn't issued any specific guidance relating to ASAs.

SEIS Changes For January 2020

The new guidelines look like they've been written to close a specific loophole. According to HMRC:

The ASA must not function as an investment instrument that offers other benefits, such as investor protection. The subscription payment must not be in effect a loan.

According to the new rules, ASAs must specify that the agreement:

  • Does not permit the subscription payment to be refunded under any circumstances
  • Cannot be varied, cancelled, or assigned
  • Bears no interest charge
  • Has a longstop date (expected to be no more than 6 months from the date of the agreement)

This also affects advanced assurance. From now on, if you want to apply for advanced assurance you have to do so BEFORE you arrange the ASA.

If these changes affect you, or you'd like to discuss any aspect of SEIS with one of our experts, please get in touch.

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