VCM35010 - Venture Capital Schemes Manual: the Seed Enterprise Investment Scheme: income tax relief: company and investor procedures: overview

The Seed Enterprise Investment Scheme (SEIS) is intended to encourage individuals to subscribe for shares in small, early-stage companies that would otherwise struggle to raise finance to support their growth and development. Individuals whose investments meet the scheme conditions are eligible to a range of tax reliefs.

Investors should be aware that the company has to observe certain rules, not just at the time of the investment but for at least three years afterwards. If it fails to meet those rules tax relief will not be given, or, if it has already been given, will be withdrawn. Similarly companies should appreciate investors must meet certain conditions for tax relief to be due.

An investor cannot claim SEIS income tax relief until the company that issued the shares sends a compliance certificate, form SEIS3, to the investor. There are various procedures that the company and the investor must follow. VCM35020+ sets out what the company has to do and VCM35120+ sets out what the investor has to do.

Companies cannot issue SEIS3 certificates to any investors who wish to claim tax reliefs (whether income tax relief or CGT deferral relief) without first being given authorisation by HMRC. The company must meet all the qualifying conditions and has received a Unique Investment Reference number from HMRC under the SEIS in respect of the relevant shares. 

HMRC’s Venture Capital Reliefs (VCR) Team (see VCM2030) decides if a company and a share issue qualify, and is responsible for monitoring companies to ensure that they continue to meet the requirements of the scheme for the duration of the qualifying period for any share issue.

In advance of inviting applications for shares, companies hoping to attract subscriptions under the SEIS can seek advance assurance that they are likely to satisfy the conditions of the scheme insofar as the company requirements are concerned. There is no requirement for them to seek this advance assurance, and neither is there a requirement for them to register with HMRC in advance of an issue of shares. Guidance on advance assurances is at VCM60200+.

The rules of confidentiality apply. The compliance statement will be considered only if it’s completed and submitted by a company secretary, a director or an agent authorised to act on the company’s behalf to negotiate with HMRC on their behalf. Where a compliance statement has been completed by an agent or a company wants HMRC to correspond with the company’s agent a signed letter from the company confirming the authority of the agent to act on their behalf must be included with the statement.

If  a company  or its authorised agent, wishes to correspond by email they must provide a disclaimer to the VCR Team see VCM2035.