VCM14110 - Venture Capital Schemes Manual: the Enterprise Investment Scheme: income tax relief: company procedures: HMRC action on receipt of compliance certificates EIS3

When the investor makes a claim for income tax relief and/or CGT deferral relief on receipt of the EIS3 form from the company, the HMRC office dealing with the investor should in the first instance check the Unique Investment Reference (UIR). In each case the officer should check that the name of the subscriber and the amount of the investment tallies with the information given on the Compliance statement EIS1(VCS) form (see VCM14020 to access the form). The issue by a company of a false or unauthorised certificate attracts a penalty under ITA07/S207 the maximum penalty is £3,000 for each such certificate.

HMRC will consider whether the individual was entitled to claim the relief obtained. This involves consideration of all the circumstances surrounding the issue of the shares in question. For example, there might be some indication that the subscription may not have been for bona fide commercial reasons - (see VCM12080). Exceptionally there might be evidence that the investor had received a ‘linked loan’ to purchase the shares (see VCM11030) or had an option to sell the shares (see VCM15020). HMRC will also consider whether the investor in question is a qualifying individual (see VCM11020) for the purposes of any EIS income tax relief claim.