Seed enterprise investment scheme ― withdrawal of relief

By Tolley
Seed enterprise investment scheme ― withdrawal of relief

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Seed enterprise investment scheme ― withdrawal of relief
  • Circumstances under which SEIS relief may be withdrawn or reduced
  • Receipt of value
  • Repayment or repurchase of share capital of other shareholders
  • Shares cease to be eligible shares
  • Notifying HMRC of an event triggering SEIS withdrawal

The Seed enterprise investment scheme (SEIS), like the Enterprise investment scheme (EIS), is designed to encourage individuals to invest money in shares issued by qualifying unquoted companies trading wholly or mainly in the UK.

HMRC have published some basic guidance . See the Seed enterprise investment scheme (SEIS) – introduction guidance note for an overview of the scheme and for details on how to make a claim for relief.

Circumstances under which SEIS relief may be withdrawn or reduced

There are a plethora of conditions that must be met in order for SEIS relief to be given and several conditions apply over periods of time (see the Seed enterprise investment scheme ― scheme criteria guidance note). It is possible for conditions to be breached after relief has been claimed by the investor. Because of this, there are extensive provisions for the withdrawal of relief. Withdrawal applies to all forms of relief given through SEIS and must be applied as if the relief had never been given.

SEIS relief is withdrawn if:

  • the shares are sold to someone other than the spouse / civil partner (ITA 2007, ss 257FA257FB)
  • a call option is granted in respect of the shares (ITA 2007, s 257FC)

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