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(b) (at any time) provides a compliance statement under section 205 in respect of the shares;

and the EIS investment is regarded as made when the shares are issued.

(3) A “VCT investment” is made in the company if an investment (of any kind) in the company is made by a VCT.

257DL The amount raised through the SEIS

(1) The sum of the following amounts must not exceed £150,000—

(a) the amount of the SEIS investment made in the issuing company which includes the relevant shares (“the current investment”),

(b) the amount of other SEIS investments made in the issuing company on the same day as the current investment,

(c) the amount of any SEIS investments made in the issuing company during the period of 3 years ending immediately before that day, and

(d) the total of any other aid which—

(i) is granted to the issuing company on the day the current investment is made or during that period, and

(ii) disregarding any SEIS investment within paragraph (a) or (b), would be de minimis aid.

(2) An “SEIS investment” is made in a company if—

(a) the company issues shares (money having been subscribed for them), and

(b) (at any time) the company provides a compliance statement under section 257ED in respect of the shares;

and an SEIS investment is made on the day when the shares are issued, and the amount of the investment is the amount subscribed for the shares.

(3) “De minimis aid” means de minimis aid within the meaning of Article 2 of Commission Regulation (EC) No 1998/2006 (de minimis aid).

The amount of the aid is the amount of the grant, or if the aid is not in the form of a grant, the gross grant equivalent amount (within the meaning of that Regulation).

The amount of the aid is the amount of the grant, or if the aid is not in the form of a grant, the gross grant equivalent amount (within the meaning of that Regulation).

(4) Subsection (5) applies where, in relation to the current investment—

(a) the sum of the amounts mentioned in subsection (1) exceeds £150,000, but

(b) the sum of the amounts in paragraphs (c) and (d) of that subsection does not exceed £150,000.

(5) In the case of the current investment and each other SEIS investment made in the issuing company on the same day (if any)—

(a) the appropriate proportion of the shares in the issue constituting the investment and the remainder are to be treated as two separate issues for the purposes of this Part, and

(b) the requirement in subsection (1) is to be treated as met in respect of the issue comprised of the appropriate proportion

of the shares in the issue, but not in respect of the issue comprised of the remaining shares.

(6) “The appropriate proportion” of the shares is—

where—

257DM The qualifying subsidiaries requirement

Any subsidiary that the issuing company has at any time in period B must be a qualifying subsidiary of the company.

257DN The property managing subsidiaries requirement

(1) Any property managing subsidiary that the issuing company has at any time in period B must be a qualifying 90% subsidiary of the company.

(2) “Property managing subsidiary” means a subsidiary of the company whose business consists wholly or mainly in the holding or managing of land or any property deriving its value from land.

(3) In subsection (2) references to property deriving its value from land include—

(a) any shareholding in a company deriving its value directly or indirectly from land,

(b) any interest in settled property deriving its value directly or indirectly from land, and

(c) any option, consent or embargo affecting the disposition of land.

CHAPTER 5 Attribution and claims for SEIS relief
Attribution
257E Attribution of SEIS relief to shares

(1) References in this Part, in relation to any individual, to the SEIS relief attributable to any shares or issue of shares are to be read as references to any reduction made in the individual’s liability to income tax that is attributed to those shares or that issue in accordance with this section.

This is subject to the provisions of Chapters 6 and 7 providing for the withdrawal or reduction of SEIS relief.

This is subject to the provisions of Chapters 6 and 7 providing for the withdrawal or reduction of SEIS relief.

(2) If an individual’s liability to income tax is reduced in any tax year, then—

(a) if the reduction is obtained because of one issue of shares, the amount of the tax reduction is attributed to that issue, and

(b) if the reduction is obtained because of two or more issues of shares, the amount of the reduction—

(i) is apportioned between those issues in the same proportions as the amounts claimed by the individual in respect of each issue, and

(ii) is attributed to those issues accordingly.

(3) If under this section an amount of any reduction of income tax is attributed to an issue of shares (“the original issue”), a proportionate part of that amount is attributed to each share in respect of which the claim is made.

(4) If corresponding bonus shares are issued to the individual in respect of any shares (“the original shares”) to which SEIS relief is attributed—

(a) a proportionate part of the total amount attributed to the original shares immediately before the bonus shares are issued is attributed to each of the shares in the holding comprising the original shares and the bonus shares, and

(b) after the issue of the bonus shares, this Part applies as if the original issue had included those shares.

(5) In subsection (4) “corresponding bonus shares” means bonus shares which are in the same company, of the same class, and carry the same rights as the original shares.

(6) If section 257AB(1) and (2) applies in the case of any issue of shares as if part of the issue had been issued in a previous tax year, this section has effect as if that part and the remainder were separate issues of shares (and that part had been issued on a day in the previous tax year).

(7) If, at a time when SEIS relief is attributable to, or to any part of, any issue of shares, the relief falls to be withdrawn or reduced under Chapters 6 and 7—

(a) if it falls to be withdrawn, the relief attributable to each of the shares in question is reduced to nil, and

(b) if it falls to be reduced by any amount, the relief attributable to each of the shares in question is reduced by a proportionate part of that amount.

Claims: general
257EA Time for making claims for SEIS relief

(1) A claim for SEIS relief in respect of shares issued by a company in any tax year may not be made later than the fifth anniversary of the normal self-assessment filing date for the tax year.

(2) If section 257AB(1) and (2) applies in the case of any issue of shares as if part of the issue had been issued in a previous tax year, this section has effect as if that part and the remainder were separate issues of shares (and that part had been issued on a day in the previous tax year).

257EB Entitlement to claim

(1) The investor is entitled to make a claim for SEIS relief in respect of the amount subscribed by the investor for the relevant shares if the investor has received from the issuing company a compliance certificate in respect of those shares.

(2) For the purposes of PAYE regulations no regard is to be had to SEIS relief unless a claim for it has been duly made.

(3) No application may be made under section 55(3) or (4) of TMA 1970 (application for postponement of payment of tax pending appeal) on the ground that the investor is eligible for SEIS relief unless a claim for the relief has been duly made by the investor.

Claims: supporting documents
257EC Compliance certificates

(1) A “compliance certificate” is a certificate which—

(a) is issued by the issuing company in respect of the relevant shares,

(b) states that, except so far as they fall to be met by or in relation to the investor, the requirements for SEIS relief (see section 257AA) are for the time being met in relation to those shares, and

(c) is in such form as the Commissioners for Her Majesty’s Revenue and Customs may direct.

(2) Before issuing a compliance certificate in respect of the relevant shares, the issuing company must provide an officer of Revenue and Customs with a compliance statement in respect of the issue of shares which includes the relevant shares.

(3) The issuing company must not issue a compliance certificate without the authority of an officer of Revenue and Customs.

(4) If the issuing company, or a person connected with the issuing company, has given notice to an officer of Revenue and Customs under section 257GF, a compliance certificate must not be issued unless the authority is given or renewed after the receipt of the notice.

(5) If an officer of Revenue and Customs—

(a) has been requested to give or renew an authority to issue a compliance certificate, and

(b) has decided whether or not to do so,

the officer must give notice of the officer’s decision to the issuing company.

257ED Compliance statements

(1) A “compliance statement” is a statement, in respect of an issue of shares, to the effect that, except so far as they fall to be met by or in relation to the individuals to whom shares included in that issue have been issued, the requirements for SEIS relief (see section 257AA)—

(a) are for the time being met in relation to the shares to which the statement relates, and

(b) have been so met at all times since the shares were issued.

(2) In determining for the purposes of subsection (1) whether the requirements for SEIS relief are met at any time in relation to the issue of shares, references in this Part to the relevant shares are read as references to the shares included in the issue.

(3) A compliance statement must not be made in respect of an issue of shares before at least one of the following conditions is met—

(a) at least 70% of the money raised by the issue has been spent for the purposes of the qualifying business activity for which it was raised;

(b) the new qualifying trade which constitutes the qualifying business activity or to which that activity relates has been carried on by the issuing company or a qualifying 90% subsidiary of that company for at least 4 months.

(4) A compliance statement must be in such form as the Commissioners for Her Majesty’s Revenue and Customs direct and must—

(a) state which of the conditions in subsection (3) is met at the time the statement is made,

(b) contain such additional information as the Commissioners reasonably require, including in particular information relating to the persons who have requested the issue of compliance certificates,

(c) contain a declaration that the statement is correct to the best of the issuing company’s knowledge and belief, and

(d) contain such other declarations as the Commissioners may reasonably require.

257EE Appeal against refusal to authorise compliance certificate

For the purposes of the provisions of TMA 1970 relating to appeals, the refusal of an officer of Revenue and Customs to authorise the issue of a compliance certificate is taken to be a decision disallowing a claim by the issuing company.

257EF Penalties for fraudulent certificate or statement etc

The issuing company is liable to a penalty not exceeding £3,000 if—

(a) it issues a compliance certificate, or provides a compliance statement, which is made fraudulently or negligently, or

(b) it issues a compliance certificate in contravention of section 257EC(3) or (4).

257EG Power to amend sections 257EC and 257ED

(1) The Treasury may by order make such amendments of sections 257EC and 257ED as they consider appropriate.

(2) An order under this section may include incidental, supplemental, consequential and transitional provision and savings.

CHAPTER 6 Withdrawal or reduction of SEIS relief
Introduction
257F Overview of Chapter

This Chapter provides for SEIS relief to be withdrawn or reduced under—

(a) section 257FA (disposal of shares),

(b) section 257FC (call options),

(c) section 257FD (put options),

(d) section 257FE (value received by the investor),

(e) section 257FP (acquisition of a trade or trading asset),

(f) section 257FQ (acquisition of share capital), and

(g) section 257FR (relief subsequently found not to have been due).

257FA Disposal of shares

(1) This section applies if—

(a) the investor disposes of any of the relevant shares,

(b) the disposal takes place before period B ends, and

(c) SEIS relief is attributable to the shares.

(2) If the disposal is not made by way of a bargain made at arm’s length, the SEIS relief attributable to the shares must be withdrawn.

(3) If the disposal is made by way of a bargain made at arm’s length, the SEIS relief attributable to the shares must—

(a) if it is greater than the amount given by the formula set out below, be reduced by that amount, and

(b) in any other case, be withdrawn.

The formula is—

where—

where—

(4) This section does not apply to a disposal of shares to which an amount of SEIS relief is attributable if—

(a) the disposal was made by an individual (“A”) to another individual (“B”), and

(b) A and B were married to, or were civil partners of, each other and living together at the time of the disposal.

(5) Section 257HA contains rules for determining which shares of any class are treated as disposed of for the purposes of this section if the investor disposes of some but not all of the shares of that class which are held by the investor.

(6) Nothing in this section applies to a disposal of shares occurring as a result of the investor’s death.

257FB Cases where maximum SEIS relief not obtained

(1) If the investor’s liability to income tax is reduced for any tax year in respect of any issue of shares and—

(a) the amount of the reduction (“A”), is less than

(b) the amount (“B”) which is equal to tax at the SEIS rate on the amount on which the investor claims SEIS relief in respect of the shares,

section 257FA(3) has effect in relation to a disposal of any of the shares as if the amount or value referred to as “R” were reduced by multiplying it by the fraction—

(2) If section 257AB(1) and (2) applies in the case of any issue of shares as if part of the issue had been issued in a previous tax year, subsection (1) has effect as if that part and the remainder were separate issues of shares (and that part had been issued on a day in the previous tax year).

(3) If the amount of SEIS relief attributable to any of the relevant shares has been reduced before the SEIS relief was obtained, the amount referred to in subsection (1) as A is to be treated for the purposes of that subsection as the amount that it would have been without that reduction.

(4) Subsection (3) does not apply to a reduction of SEIS relief by virtue of section 257E(4) (attribution of SEIS relief if there is a corresponding issue of bonus shares).

257FC Call options

(1) This section applies if the investor grants an option which, if exercised, would bind the investor to sell any of the relevant shares.

(2) The grant of the option is treated for the purposes of section 257FAas a disposal of the shares to which the option relates.

(3) Nothing in this section prejudices section 257CD (no pre-arranged exits).

257FD Put options

(1) This section applies if, at any time in period A, a person grants the investor an option which, if exercised, would bind the grantor to purchase any of the relevant shares.

(2) Any SEIS relief attributable to the shares to which the option relates must be withdrawn.

(3) For the purposes of subsection (2) the shares to which an option relates are those which, if—

(a) the option were exercised immediately after the grant, and

(b) any shares in the issuing company acquired by the investor after the grant were disposed of immediately after being acquired,

would be treated for the purposes of section 257FA as disposed of in pursuance of the option.

Value received by investor
257FE Value received by the investor

(1) This section applies if the investor receives any value from the issuing company at any time in period A relating to the relevant shares.

(2) Any SEIS relief attributable to the shares must—

(a) if it is greater than the amount given by the formula set out below, be reduced by that amount, and

(b) in any other case, be withdrawn.

The formula is—

where—

where—

(3) This section is subject to the following sections—

(a) section 257FF (value received: receipts of insignificant value),

(b) section 257FJ (value received where there is more than one issue of shares),

(c) section 257FK (value received where part of share issue treated as made in previous tax year),

(d) section 257FL (cases where maximum SEIS relief not obtained),

(e) section 257FM (receipts of value by and from connected persons etc), and

(f) section 257FN (receipt of replacement value).

Sections 257FJ to 257FL are to be applied in the order in which they appear in this Part.

(c)(c)section 257FK (value received where part of share issue treated as made in previous tax year),

(d) section 257FL (cases where maximum SEIS relief not obtained),

(e) section 257FM (receipts of value by and from connected persons etc), and

(f) section 257FN (receipt of replacement value).

Sections 257FJ to 257FL are to be applied in the order in which they appear in this Part.

(4) Value received is to be ignored, for the purposes of this section, to the extent to which SEIS relief attributable to the shares has already been withdrawn or reduced on its account.

(5) For the purposes of this section and sections 257FF to 257FO, an individual who acquires any relevant shares on such a transfer as is mentioned in section 257H (spouses or civil partners) is treated as the investor.

257FF Value received: receipts of insignificant value

(1) Section 257FE(2) does not apply if the receipt of value is a receipt of insignificant value.

This is subject to subsection (2).

This is subject to subsection (2).

(2) If—

(a) value is received (“the relevant receipt”) by the investor from the issuing company at any time in period A relating to the relevant shares,

(b) the investor has received from the issuing company one or more receipts of insignificant value at a time or times—

(i) during that period, but

(ii) not later than the time of the relevant receipt, and

(c) the total value of the receipts within paragraphs (a) and (b) is not an amount of insignificant value,

the investor is treated for the purposes of this Chapter as if the relevant receipt had been a receipt of an amount of value equal to that total amount.

(3) A receipt does not fall within subsection (2)(b) if it has previously formed part of a total amount falling within subsection (2)(c).

257FG Meaning of “a receipt of insignificant value”

(1) This section applies for the purposes of section 257FF.

(2) “A receipt of insignificant value” means a receipt of an amount of insignificant value, that is, an amount of value which—

(a) is not more than £1,000, or

(b) if it is more than £1,000, is insignificant in relation to the amount subscribed by the investor for the relevant shares.

This is subject to subsection (3).

(3) If at any time in the period—

(a) beginning 12 months before the issue of the relevant shares, and

(b) ending at the end of the issue date,

repayment arrangements are in existence, no amount of value received by the investor is treated as a receipt of insignificant value.

(4) For this purpose “repayment arrangements” means arrangements which provide for the investor to receive, or to be entitled to receive, any value from the issuing company at any time in period A relating to the relevant shares.

(5) For the purposes of this section—

(a) the references in this section to the investor include a reference to any person who at any time in period A relating to the relevant shares is an associate of the investor (whether or not that person is such an associate at the material time), and

(b) the reference in subsection (4) to the issuing company includes a reference to a person who at any time in period A relating to the relevant shares is connected with that company (whether or not that person is so connected at the material time).

257FH When value is received

(1) This section applies for the purposes of sections 257FE (value received by the investor) and 257FJ (value received where there is more than one issue).

(2) The investor receives value from the issuing company at any time when the issuing company—

(a) repays, redeems or repurchases any of its share capital or securities which belong to the investor or makes any payment to the investor for giving up the investor’s right to any of the issuing company’s share capital or any security on its cancellation or extinguishment,

(b) repays, in pursuance of any arrangements for or in connection with the acquisition of the shares in respect of which SEIS relief is claimed, any debt owed to the investor other than a debt which was incurred by the company—

(i) on or after the date of issue of those shares, and

(ii) otherwise than in consideration of the extinguishment of a debt incurred before that date,

(c) makes to the investor any payment for giving up on its extinguishment the investor’s right to any debt, other than a debt in respect of a payment of the kind mentioned in subsection (3)(a) or (f) or an ordinary trade debt,

(d) releases or waives any liability of the investor to the issuing company or discharges or undertakes to discharge any liability of the investor to a third person,

(e) makes a loan or advance to the investor which has not been repaid in full before the issue of the shares in respect of which SEIS relief is claimed,

(f) provides a benefit or facility for the investor,

(g) transfers an asset to the investor for no consideration or for consideration less than its market value or acquires an asset from the investor for consideration greater than its market value, or

(h) makes to the investor any other payment except—

(i) an excluded payment, or

(ii) a payment in discharge of an ordinary trade debt.

(3) “Excluded payment” means—

(a) any payment or reimbursement of travelling or other expenses, exclusively and necessarily incurred by the investor or an associate of the investor in the performance of the investor’s or associate’s duties as a director,

(b) any interest which represents no more than a reasonable commercial return on money lent to the issuing company or any person connected with that company,

(c) any dividend or other distribution which does not exceed a normal return on the investment,

(d) any payment for the supply of goods which does not exceed their market value,

(e) any payment of rent for any property occupied by the issuing company or a person connected with that company which does not exceed a reasonable and commercial rent for the property, and

(f) any necessary and reasonable remuneration which meets the conditions in subsection (4).

(4) The conditions are that the remuneration—

(a) is paid for services rendered to the issuing company or a person connected with that company in the course of a trade or profession (not being secretarial or managerial services or services of a kind provided by the person to whom they are rendered), and

(b) is taken into account in calculating for tax purposes the profits of that trade or profession.

(5) For the purposes of subsection (2)(d) the issuing company is to be treated as having released or waived a liability if the liability is not discharged within 12 months of the time when it ought to have been discharged.

(6) For the purposes of subsection (2)(e) the following is to be treated as if it were a loan made by the issuing company to the investor—

(a) the amount of any debt (other than an ordinary trade debt) incurred by the investor to the issuing company, and

(b) the amount of any debt due from the investor to a third party which has been assigned to the issuing company.

(7) The investor also receives value from the issuing company if—

(a) in respect of ordinary shares held by the investor any payment or asset is received in a winding up or in connection with a dissolution of the company, and

(b) the winding up or dissolution falls within section 257DB(4) (no tax avoidance).

(8) The investor also receives value from the issuing company if a person within subsection (9)—

(a) purchases any of its share capital or securities which belong to the investor, or

(b) makes any payment to the investor for giving up any right in relation to any of the company’s share capital or securities.

(9) Those persons are—

(a) any person who has a substantial interest in the company within the meaning of section 257BB;

(b) any employee of the issuing company;

(c) any director of the issuing company.

(10) If because of the investor’s disposal of shares in a company any SEIS relief attributable to those shares is withdrawn or reduced under section 257FA, the investor is not to be treated as receiving value from the company in respect of the disposal.

(11) The investor is not to be treated as receiving value from the issuing company merely because of the payment to the investor, or any associate of the investor, of any remuneration for services rendered to that company as a director if the remuneration is reasonable remuneration.

(12) For the purposes of subsection (11)—

(a) the reference in that subsection to the payment of remuneration includes a reference to the provision of any benefit or facility, and

(b) in the case of an individual who is both a director and an employee of a company, the reference in that subsection to services rendered to that company as a director includes a reference to services rendered to that company as an employee.

(13) In this section—

(a) “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business if any credit given—

(i) is for not more than 6 months, and

(ii) is not longer than that normally given to customers of the person carrying on the trade or business, and

(b) any reference to a payment to an individual includes a payment made to the individual indirectly or to the individual’s order or for the individual’s benefit.

257FI The amount of value received

In a case falling within a provision listed in column 1 of the following table, the amount of value received for the purposes of sections 257FE and 257FJ is given by the corresponding entry in column 2 of the table.

Provision The amount of value received
Section 257FH(2)(a), (b) or (c) The amount received by the investor or, if greater, the market value of the shares, securities or debt
Section 257FH(2)(d) The amount of the liability
Section 257FH(2)(e) The amount of the loan or advance, less the amount of any repayment made before the issue of the relevant shares
Section 257FH(2)(f) The cost to the issuing company of providing the benefit or facility, less any consideration given for it by the investor
Section 257FH(2)(g) The difference between the market value of the asset and the consideration (if any) given for it
Section 257FH(2)(h) The amount of the payment
Section 257FH(7) The amount of the payment or the market value of the asset
Section 257FH(8) The amount received by the investor or, if greater, the market value of the shares or securities
257FJ Value received where there is more than one issue

(1) This section applies if—

(a) two or more issues of shares in the issuing company have been made to the investor which include shares in respect of which the investor obtains SEIS relief, and

(b) value is received by the investor at any time in the applicable periods for two or more of those issues.

(2) Section 257FE(2) has effect in relation to the shares included in each of the issues referred to in subsection (1)(b) as if the amount of value referred to as “R” were reduced by multiplying it by the fraction—

where—

where—

(3) For the purposes of subsection (1) “the applicable period” for an issue of shares is period A in relation to those shares.

257FK Value received where part of issue treated as made in previous tax year

(1) This section applies if—

(a) section 257FE(2) applies to an issue of shares, and

(b) section 257AB(1) and (2) (form and amount of SEIS relief) applies in the case of that issue as if part of the issue had been issued in a previous tax year.

(2) This subsection explains how the calculation under section 257FE(2) is to be made.

Step 1

Apportion the amount referred to as “R” between the tax year in which the shares were issued and the previous tax year by multiplying that amount by the fraction—

Step 2

In relation to each of the amounts (“R1” and “R2”) so apportioned to the two tax years, calculate the amounts (“X1” and “X2”) that would be given by the formula if there were separate issues of shares in those tax years.

In calculating amounts X1 and X2, apply section 257FL if appropriate but do not apply section 257FJ.

Step 3

Add amounts X1 and X2 together.

The result is the required amount.

The result is the required amount.

257FL Cases where maximum SEIS relief not obtained

(1) If the investor’s liability to income tax is reduced for any tax year in respect of any issue of shares and—

(a) the amount of the reduction (“A”), is less than

(b) the amount (“B”) which is equal to income tax at the SEIS rate on the amount on which the investor claims SEIS relief in respect of the shares,

section 257FE(2) has effect in relation to any value received as if the amount referred to as “R” were reduced by multiplying it by the fraction—

(2) If the amount of SEIS relief attributable to any of the relevant shares has been reduced before the SEIS relief was obtained, the amount referred to in subsection (1) as A is to be treated for the purposes of that subsection as the amount that it would have been without that reduction.

(3) Subsection (2) does not apply to a reduction of SEIS relief by virtue of section 257E(4) (attribution of SEIS relief where there is a corresponding issue of bonus shares).

257FM Receipts of value by and from connected persons etc

In sections 257FE, 257FF and 257FH to 257FJ

(a) any reference to a payment or transfer to the investor includes a reference to a payment or transfer made to the investor indirectly or to the investor’s order or for the investor’s benefit,

(b) any reference to the investor includes a reference to an associate of the investor, and

(c) any reference to the issuing company includes a reference to a person who at any time in period A relating to the relevant shares is connected with that company (whether or not that person is so connected at the material time).

257FN Receipt of replacement value

(1) If—

(a) any SEIS relief attributable to the relevant shares would, in the absence of this section, be reduced or withdrawn under section 257FE because of a receipt of value within section 257FH(2), (7) or (8) (“the original value”),

(b) the original supplier receives value (“replacement value”) from the original recipient and the receipt is a qualifying receipt, and

(c) the amount of the replacement value is at least the amount of the original value,

section 257FE does not, because of the receipt of value, have effect to reduce or withdraw the SEIS relief.

This is subject to section 257FO(1) and (2).

This is subject to section 257FO(1) and (2).

(2) For the purposes of this section—

(3) If the amount of the original value is, by virtue of section 257FJ, treated as reduced for the purposes of section 257FE(2) as it applies in relation to the relevant shares in question, the reference in subsection (1)(c) to the amount of the original value is to be read as a reference to the amount of that value ignoring the reduction.

(4) A receipt of the replacement value is a qualifying receipt for the purposes of subsection (1) if it arises—

(a) because of the original recipient doing one or more of the following—

(i) making a payment to the original supplier, other than a payment within paragraph (c) or a payment to which subsection (5) applies,

(ii) acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset,

(iii) disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset,

(b) if the receipt of the original value was within section 257FH(2)(d), because of an event the effect of which is to reverse the event which constituted the receipt of the original value, or

(c) if the receipt of the original value was within section 257FH(8), because of the original recipient repurchasing the share capital or securities in question, or (as the case may be) re-acquiring the right in question, for a consideration the amount or value of which is at least the amount of the original value.

(5) This subsection applies to—

(a) any payment for any goods, services or facilities, provided (whether in the course of trade or otherwise) by—

(i) the original supplier, or

(ii) any other person who, at any time in period A relating to the relevant shares, is an associate of, or is connected with, that supplier (whether or not the other person is such an associate, or is so connected, at the material time),

which is reasonable in relation to the market value of those goods, services or facilities,

(b) any payment of any interest which represents no more than a reasonable commercial return on any money lent to—

(i) the original recipient, or

(ii) any person who, at any time in period A relating to the relevant shares, is an associate of that recipient (whether or not the person is such an associate at the material time),

(c) any payment for the acquisition of an asset which does not exceed its market value,

(d) any payment, as rent for any property occupied by—

(i) the original recipient, or

(ii) any person who, at any time in period A relating to the relevant shares, is an associate of that recipient (whether or not the person is such an associate at the material time),

of an amount not exceeding a reasonable and commercial rent for the property,

(e) any payment in discharge of an ordinary trade debt, and

(f) any payment for shares in or securities of any company in circumstances that do not fall within subsection (4)(a)(ii).

(6) For the purposes of this section, the amount of the replacement value is—

(a) in a case within paragraph (a) of subsection (4), the sum of—

(i) the amount of any payment within sub-paragraph (i) of that paragraph, and

(ii) the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the amount or value of the consideration (if any) received for it,

(b) in a case within subsection (4)(b), the same as the amount of the original value, and

(c) in a case within subsection (4)(c), the amount or value of the consideration received by the original supplier.

Section 257FI applies for the purpose of determining the original value.

(7) In this section—

(a) any reference to a payment to a person (however expressed) includes a reference to a payment made to the person indirectly or to the person’s order or for the person’s benefit, and

(b) “ordinary trade debt” has the meaning given by section 257FH(13).

257FO Section 257FN: supplementary

(1) The receipt of the replacement value by the original supplier is ignored for the purposes of section 257FN(1) to the extent to which it has previously been set (under that section) against a receipt of value to prevent any reduction or withdrawal of SEIS relief under section 257FE.

(2) The receipt of the replacement value by the original supplier (“the event”) is ignored for the purposes of section 257FN if—

(a) the event occurs before period A relating to the relevant shares,

(b) if the event occurs after the time the original recipient receives the original value, it does not occur as soon after that time as is reasonably practicable in the circumstances, or

(c) if an appeal has been brought by the investor against an assessment to withdraw or reduce any SEIS relief attributable to the relevant shares because of the receipt of the original value, the event occurs more than 60 days after the day on which the amount of relief which falls to be withdrawn has been finally determined.

But nothing in section 257FN or this section requires the replacement value to be received after the original value.

(3) This subsection applies if—

(a) the receipt of the replacement value by the original supplier is a qualifying receipt for the purposes of section 257FN(1),

(b) in consequence of the receipt, any receipts of value are ignored for the purposes of section 257FE as that section applies in relation to the shares in question or any other shares subscribed for by the investor, and

(c) the event which gives rise to the receipt is (or includes) a subscription for shares by—

(i) the investor, or

(ii) any person who at any time in period A relating to the relevant shares is an associate of the investor (whether or not the person is such an associate at the material time).

(4) If subsection (3) applies, the person who subscribes for the shares is not to be eligible for any SEIS relief in relation to those shares or any other shares in the same issue.

(5) In this section “the original recipient”, “the original supplier” and “replacement value” have the same meaning as in section 257FN.

Miscellaneous
257FP Acquisition of trade or trading assets

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