VCM14140 - Venture Capital Schemes Manual: the Enterprise Investment Scheme: income tax relief: investor procedures: investor claims: the process for investor to claim the tax reliefs

An investor must make a claim for the income tax reliefs on their Self-Assessment (SA) tax return for the tax year in which the shares were issued. Tax reliefs for the EIS should normally be claimed on the tax return for that year. Where, however, the tax return has already been made and a claim, or an additional claim, needs to be made, the return should be either amended or, if it is too late to amend it, then this should be supplemented by a ‘stand-alone’ claim, using the claim section of form EIS3 (or the form EIS5 if the investment is made through an Approved Investment Fund).

When a claim is made on a SA tax return the required details in respect of each holding of shares should be copied from the form EIS3 into the space reserved at the end of the form for further information. As regards the processing of a return which includes a claim, see SAM121400

The relief claimed cannot exceed an investor tax bill.  HMRC takes the relief into account when it calculates their tax bill. An investor may either get a refund or a reduction of their tax bill.  

Investors who wish to obtain relief for an investment for the current year without waiting for the year to end can effectively do so by requesting a change to their PAYE tax code number (using the claim section of form EIS3 or form EIS5) or by claiming a reduction in a payment on account. Investors will still have to submit an SA Return in the following tax year to show the amount of tax relief claimed. See guidance on EIS tax coding process, PAYE10045

In no circumstances can a claim be made, or a coding adjustment made, or a payment on account reduced, before the investor has received form EIS3 or form EIS5. Forms EIS3 can only be obtained from the company issuing the shares, and are only supplied to a company submitted a satisfactory statement on form EIS1 in respect of the share issue in question. The EIS3 should show the Unique Investment Reference number for the share issue. 

Form EIS5 can only be obtained from a fund manager to certify receipt by the manager of form EIS3 from HMRC.

A claim does not become final, and relief is not finally obtained, until the tax return on which it is made ceases to be capable of amendment. Where for any reason relief which is claimed would, if it had been obtained, have had to be withdrawn, the individual ceases to be eligible for relief - see ITA07/S257(4) - and the tax return needs to be amended accordingly.

As regards the procedure where the investor wants to treat some of the shares as issued in the proceeding tax year see VCM14150.