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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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SEIS: income tax relief: withdrawal or reduction of SEIS relief: overview

Both income tax relief and capital gains re-investment relief (‘tax relief’) will be withdrawn if during the three years from the date of issue of the shares:

  • the investor becomes employed by the company without being a director of the company (see VCM32020),
  • the investor’s holding in the company becomes a ‘substantial interest’ (see VCM32030),
  • the shares cease to be eligible shares (see VCM33020) or there is a put or call option over them (see VCM36030)
  • the company ceases to meet the qualifying conditions (see VCM34000+)
  • the company fails to spend the money raised by the share issue as required (see VCM33040)

This is additional to the general power to withdraw relief under TMA70/S29(1)(c) where an HMRC officer discovers that the relief is excessive.

Tax relief will be either withdrawn or reduced if at any time during the three years from the date of issue of the shares:

  • the investor disposes of any of the shares (see VCM36020),
  • the investor or associate receives ‘value’ from the company or from a person connected with that company (see VCM36040).