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HMRC internal manual

Venture Capital Schemes Manual

EIS: income tax relief: company and investor procedures: investor claims: refusal of claims

If a claim cannot be accepted and agreement cannot be reached, a formal notice of refusal should be sent to the claimant with a covering letter, a copy of it being sent to the agent where appropriate. Where the refusal relates to more than one claim, the notice should identify clearly all the separate claims to which it relates.

Forthright (Wales) Ltd v Davies (76TC134) verified that a claim can be refused under ICTA/S306(10) or ITA/S206. There is no requirement for the refusal of a claim to be included within a closure notice.

The notice of refusal should be on the following lines:

‘The claim(s) to Income Tax relief under the Enterprise Investment Scheme listed above have been duly considered and I hereby give notice of my decision as follows; the claims are refused. The grounds for this decision are that….

If you do not accept this decision, written notice of appeal should be made to me within 30 days of receipt of this notice.

If you appeal I will consider any further information you send me and try to reach agreement with you. If we cannot agree, you can

* ask for my decision to be reviewed by an HMRC officer not previously involved in the matter, or
* notify your appeal to an independent tribunal 

If you opt for a review you can still notify your appeal to the tribunal after the review has finished.’