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HMRC internal manual

Venture Capital Schemes Manual

SEIS: income tax relief: withdrawal or reduction of SEIS relief: value received by investor: overview

ITA07/S257FE to 257FO

Where an individual who has obtained relief, or is entitled to obtain relief, in respect of shares in a company receives any value within period A (see VCM31140) that relief is to be reduced. For the calculation of the reduction, seeVCM36050.

But where the value received is insignificant, the relief is not affected. See VCM36060 for the meaning of ‘insignificant’.

This rule is extended by ITA07/S257FM to cover cases where:

  • the value comes from any person connected with the company (whether it becomes connected before or after the value leaves it)
  • the recipient is an associate of the individual.

VCM36070 sets out the circumstances in which value is considered to be received, and explains how the amount of the ‘value’ is to be determined.

A number of types of payment are not treated as the provision of ‘value’ - see VCM36080.

How much relief is withdrawn will depend on the amount of the value received. There is scope for relief to be retained if the value received is made good by the investor as soon as is practicable. See VCM36090.

Obligation to report

An individual who receives value is obliged by ITA07/S240 to make a report to HMRC within 60 days. Failure to make such a report attracts a penalty under TMA70/S98.