Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Schedule 6 — Seed enterprise investment scheme
Part 1 — The scheme
218

257DI
The gross assets requirement
(1)
In the case of relevant shares issued by a single company, the value
of the company’s assets must not exceed £200,000 immediately
before the relevant shares are issued.
(2)
In the case of relevant shares issued by a parent company, the value
5
of the group assets must not exceed £200,000 immediately before the
relevant shares are issued.
(3)
For the purposes of this section the value of the group assets is the
sum of the values of the gross assets of each of the members of the
group, ignoring any that consist in rights against, or shares in or
10
securities of, another member of the group.
257DJ
The number of employees requirement
(1)
If the issuing company is a single company, the full-time equivalent
employee number for it must be less than 25 when the relevant
shares are issued.
15
(2)
If the issuing company is a parent company, the sum of—
(a)
the full-time equivalent employee number for it, and
(b)
the full-time equivalent employee numbers for each of its
qualifying subsidiaries,

must be less than 25 when the relevant shares are issued.
20
(3)
The full-time equivalent employee number for a company is
calculated as follows—
Step 1
Find the number of full-time employees of the company.
Step 2
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Add, for each employee of the company who is not a full-time
employee, such fraction as is just and reasonable.
The result is the full-time equivalent employee number.
(4)
In this section references to an employee—
(a)
include a director, but
30
(b)
do not include—
(i)
an employee on maternity or paternity leave, or
(ii)
a student on vocational training.
257DK
No previous other risk capital scheme investments
(1)
The requirement of this section is that—
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(a)
no EIS investment or VCT investment is or has been made in
the issuing company on or before the day on which the
relevant shares are issued, and
(b)
no EIS investment or VCT investment has been made on or
before that day in a company which at the time the relevant
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shares are issued is a qualifying subsidiary of the issuing
company.
(2)
An “EIS investment” is made in the company if the company—
(a)
issues shares (money having been subscribed for them), and

Finance Bill
Schedule 6 — Seed enterprise investment scheme
Part 1 — The scheme
219

(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
5
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
10
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
15
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
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(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
25
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
30
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).
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(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.
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(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,
45
and
(b)
the requirement in subsection (1) is to be treated as met in
respect of the issue comprised of the appropriate proportion

Finance Bill
Schedule 6 — Seed enterprise investment scheme
Part 1 — The scheme
220

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—

A − B

C


where—

A is £150,000,
5

B is the sum of the amounts in paragraphs (c) and (d) of
subsection (1), and

C is the sum of the amounts in paragraphs (a) and (b) of that
subsection.
257DM
The qualifying subsidiaries requirement
10

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
15
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
20
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
25
(c)
any option, consent or embargo affecting the disposition of
land.
Chapter 5
Attribution and claims for SEIS relief
Attribution
30
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
35
accordance with this section.

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—
40

Finance Bill
Schedule 6 — Seed enterprise investment scheme
Part 1 — The scheme
221

(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
5
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
10
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—
15
(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
20
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
25
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
30
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
35
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
40
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
45
issues of shares (and that part had been issued on a day in the
previous tax year).