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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) 5A “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
10company 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
15company 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) 20disregarding 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)
25(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) 30“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
35meaning 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
40subsection 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
45treated 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

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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 10 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
15any 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) 20In 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
25indirectly from land, and

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

CHAPTER 5 Attribution and claims for SEIS relief
Attribution
257E 30Attribution 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
35accordance 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—

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(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) 5is 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
10attributed 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
15attributed—

(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) 20after 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) 25If 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) 30If, 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) 35if 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) 40A 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
45section 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).

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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
5certificate 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
10the 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) 15is 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,
20and

(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
25Customs 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
30company, 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) 35has 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 40 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
45257AA)—

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(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
5requirements 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) 10at 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
15carried 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
20time 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) 25contain 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

30For 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

35The 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 40 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.

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

This Chapter provides for SEIS relief to be withdrawn or reduced
5under—

(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) 10section 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) 15This 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,
20the 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) 25in any other case, be withdrawn.

The formula is—


R × SEISR

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
35individual (“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
40investor disposes of some but not all of the shares of that class which
are held by the investor.

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(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
5respect 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,

10section 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
15as 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
20has 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
25of 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) 30The grant of the option is treated for the purposes of section 257FA
as 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) 35This 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) 40For 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

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(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
5pursuance 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
10shares.

(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.

15The formula is—


R × SEISR

where—

(3) 20This 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
25treated 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) 30section 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) 35section 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).

40Sections 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) 45For 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) 50Section 257FE(2) does not apply if the receipt of value is a receipt of
insignificant value.

This is subject to subsection (2).

(2) If—

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(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
5more 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,

10the 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 15 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) 20if 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,
25and

(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
30which 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
35reference 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
40includes 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) 45This section applies for the purposes of sections 257FE (value
received by the investor) and 257FJ (value received where there is
more than one issue).

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(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
5payment 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
10which 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) 15makes 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
20company 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) 25provides 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) 30makes 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
35expenses, 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
40any 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) 45any 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
50conditions in subsection (4).

(4) The conditions are that the remuneration—

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