(4) Any notice required to be given by the issuing company under
subsection (3)(a) must be given—

(a) within 60 days of the event, or

(b) if the event is a receipt of value within section 257FH(2) from
5a person connected with the company (see section 257FM),
within 60 days of the company coming to know of the event.

(5) Any notice required to be given by a person under subsection (3)(b)
must be given within 60 days of the person coming to know of the
event.

(6) 10If a person—

(a) is required under this section to give notice of a receipt of
value which is within section 257FE, or would be within that
section but for section 257FN, and

(b) has knowledge of any replacement value received (or
15expected to be received) because of a qualifying receipt,

the notice must include particulars of that receipt of replacement
value (or expected receipt).

(7) In subsection (6) “qualifying receipt” and “replacement value” are to
be read in accordance with section 257FN.

257GG 20 Power to require information where section 257GE or 257GF applies
or could have applied

(1) This section applies if an officer of Revenue and Customs has reason
to believe that a person—

(a) has not given a notice which the person is required to give
25under section 257GE or 257GF in respect of any event, or

(b) has given or received value within the meaning of section
257FH(2) or (8) which, but for the fact that the amount given
or received was an amount of insignificant value, would have
triggered a requirement to give such a notice.

(2) 30The officer may by notice require the person concerned to supply the
officer, within such time as the officer may specify in the notice, with
such information relating to the event as the officer may reasonably
require for the purposes of this Part.

(3) The period specified in a notice under subsection (2) must be at least
3560 days.

(4) In subsection (1)(b), the reference to an amount of insignificant value
is construed in accordance with section 257FG(2).

257GH Power to require information in other cases

(1) Subsection (2) applies if SEIS relief is claimed in respect of shares in
40a company, and an officer of Revenue and Customs has reason to
believe that it may not be due because of any such arrangements or
scheme as is mentioned in—

(a) section 257BC (no related investment arrangements),

(b) section 257BE or 257DB(2) or (4) (no tax avoidance),

(c) 45section 257CD(1) (no pre-arranged exits),

(d) section 257CF (no disqualifying arrangements),

(e) section 257DB(4) (winding up, administration etc), or

(f) section 257DG(1) or (2) (conditions ceasing to be met).

(2) The officer may by notice require any person concerned to supply
the officer within such time as may be specified in the notice with—

(a) 5a declaration in writing stating whether or not, according to
the information which that person has or can reasonably
obtain, any such arrangement or scheme exists or has existed,
and

(b) such other information as the officer may reasonably require
10for the purposes of the provision in question and as that
person has or can reasonably obtain.

(3) The period specified in a notice under subsection (2) must be at least
60 days.

(4) For the purposes of subsection (2), in a case falling within a provision
15listed in column 1 of the following table, the person concerned is
given by the corresponding entry in column 2 of the table.

References in this subsection to the claimant include references to
any person to whom the claimant appears to have made such a
transfer as is mentioned in section 257H (spouses or civil partners) of
45any of the shares in question.

(5) If SEIS relief has been obtained in respect of shares in a company—

(a) any person who receives from the company any payment or
asset which may constitute value received (by the person or
another) for the purposes of section 257FE, and

(b) any person on whose behalf such a payment or asset is
received,

must, if so required by an officer of Revenue and Customs, state
whether the payment or asset so received is received on behalf of any
5other person and, if so, the name and address of that other person.

(6) If SEIS relief has been claimed in respect of shares in a company—

(a) any person who holds or has held shares in the company, and

(b) any person on whose behalf any such shares are or were held,

must, if so required by an officer of Revenue and Customs, state
10whether the shares so held are or were held on behalf of any other
person and, if so, the name and address of that other person.

257GI Obligations of secrecy

No obligation of secrecy imposed by statute or otherwise prevents an
officer of Revenue and Customs from disclosing to a company that
15SEIS relief has been obtained or claimed in respect of a particular
number or proportion of its shares.

CHAPTER 8 Supplementary and general

Disposals of shares

257H Transfers between spouses or civil partners

(1) 20This section applies if—

(a) shares to which an amount of SEIS relief is attributable were
issued to an individual (“A”),

(b) A transferred the shares to another individual (“B”) during
their lives,

(c) 25A was married to, or was the civil partner of, B at the time of
the transfer, and

(d) section 257FA (disposal of shares) does not apply to the
transfer.

(2) This Part has effect, in relation to any subsequent disposal or other
30event, as if—

(a) B were the individual who had subscribed for the shares,

(b) the amount that B had subscribed for the shares were the
amount that A had subscribed for them,

(c) B’s liability to income tax had been reduced in respect of the
35shares for the same tax year as that for which A’s was so
reduced,

(d) the amount by which B’s liability to income tax had been
reduced in respect of the shares were the same as that by
which A’s liability to income tax had been so reduced, and

(e) 40that amount of SEIS relief had continued to be attributable to
the shares despite the transfer.

(3) If the amount of SEIS relief attributable to the shares had been
reduced before the relief was obtained by A—

(a) this Part has effect, in relation to any subsequent disposal or
other event, as if the amount of SEIS relief attributable to the
shares transferred to B had been correspondingly reduced
before the relief was obtained by B, and

(b) 5sections 257FB(3) and 257FL(2) apply in relation to B as they
would have applied in relation to A.

(4) If, because of any such disposal or other event, an assessment for
reducing or withdrawing SEIS relief is to be made, the assessment is
to be made on B.

257HA 10 Identification of shares on a disposal

(1) The rules in subsections (2) and (3) are for determining which shares
of any class are treated as disposed of for the purposes of—

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

(b) section 257H (spouses or civil partners),

15if the investor disposes of some but not all of the shares of that class
which the investor holds in a company.

(2) Shares acquired on an earlier day are treated as disposed of before
shares acquired on a later day.

(3) Shares acquired on the same day are treated as disposed of in the
20following order—

(a) first any to which no SEIS relief is attributable,

(b) next any to which SEIS relief (but not SEIS re-investment
relief) is attributable, and

(c) next any to which SEIS relief and SEIS re-investment relief
25are attributable.

(4) Any shares to which SEIS relief is attributable and which were
transferred to an individual as mentioned in section 257H are treated
for the purposes of subsections (2) and (3) as acquired by the
individual on the day on which they were issued.

(5) 30In a case to which section 127 of TCGA 1992 applies (including the
case where that section applies by virtue of an enactment relating to
chargeable gains), shares included in the new holding are treated for
the purposes of subsections (2) and (3) as acquired when the original
shares were acquired.

(6) 35In this section—

• “new holding” and “original shares” have the same meaning as
  in section 127 of TCGA 1992 (or, as the case may be, that
  section as applied by the enactment concerned);

• “SEIS re-investment relief” means relief under Schedule 5BB to
  40TCGA 1992.

Acquisition of issuing company

257HB Continuity of SEIS relief where issuing company is acquired by new
company

(1) This section applies if—

(a) a company (“the new company”) in which the only issued
shares are subscriber shares acquires all the shares (“old
shares”) in another company (“the old company”),

(b) the consideration for the old shares consists wholly of the
5issue of shares (“new shares”) in the new company,

(c) the consideration for the new shares of each description
consists wholly of old shares of the corresponding
description,

(d) new shares of each description are issued to the holders of old
10shares of the corresponding description in respect of and in
proportion to their holdings,

(e) at some time before the issue of the new shares—

(i) the old company issued shares which meet the
requirements of section 257CA(2), and

(ii) 15a compliance certificate in respect of those shares was
issued by that company for the purposes of
subsection (1) of section 257EB and in accordance
with section 257EC, and

(f) before the issue of the new shares the Commissioners for Her
20Majesty’s Revenue and Customs have, on the application of
the new company or the old company, notified that company
that they are satisfied that the exchange of shares—

(i) will be effected for genuine commercial reasons, and

(ii) will not form part of any such scheme or
25arrangements as are mentioned in section 137(1) of
TCGA 1992 (schemes with avoidance purposes).

In this subsection references to shares, except in the expressions
“subscriber shares” and “shares which meet the requirements of
section 257CA(2)“, include securities.

(2) 30Subsection (2) of section 138 of TCGA 1992 (procedure for advance
clearance) applies for the purposes of subsection (1)(f) as it applies
for the purposes of subsection (1) of that section.

(3) For the purposes of this Part—

(a) the exchange of shares is not regarded as involving any
35disposal of the old shares or any acquisition of the new
shares, and

(b) any SEIS relief which is attributable to any old shares is
attributable instead to the new shares for which they are
exchanged.

(4) 40Nothing in section 257DG (the control and independence
requirement) applies in relation to such an exchange of shares, or
shares and securities, as is mentioned in subsection (1), or
arrangements with a view to such an exchange.

(5) For the purposes of this section old shares and new shares are of a
45corresponding description if, on the assumption that they were
shares in the same company, they would be of the same class and
carry the same rights.

(6) References in sections 257HC and 257HD to “old shares”, “new
shares”, “the old company” and “the new company” are to be read in
50accordance with this section.

257HC Carry over of obligations etc where SEIS relief attributed to new
shares

(1) This section applies if, under section 257HB, any SEIS relief which is
attributable to any old shares becomes attributable instead to any
5new shares.

(2) This Part has effect as if anything which under—

(a) section 257EB(1) (entitlement to claim),

(b) section 257FR(3) (relief subsequently found not to be due), or

(c) sections 257GF to 257GH (information to be provided),

10has been done, or is required to be done, by or in relation to the old
company had been done, or were required to be done, by or in
relation to the new company.

(3) Any appeal brought by the old company against a notice under
section 257FR(3)(b) may be prosecuted by the new company as if it
15had been brought by that company.

257HD Substitution of new shares for old shares

(1) Subsection (2) applies if, in the case of any new shares held by an
individual to which SEIS relief becomes attributable under section
257HB, the old shares for which they were exchanged were
20subscribed for by and issued to the individual.

(2) This Part has effect as if—

(a) the new shares had been subscribed for by the individual at
the time when, and for the amount for which, the old shares
were subscribed for by the individual,

(b) 25the new shares had been issued to the individual by the new
company at the time when the old shares were issued to the
individual by the old company,

(c) the claim for SEIS relief made in respect of the old shares had
been made in respect of the new shares, and

(d) 30the individual’s liability to income tax had been reduced in
respect of the new shares for the same tax year as that for
which the individual’s liability was so reduced in respect of
the old shares.

(3) Subsection (4) applies if, in the case of any new shares held by an
35individual to which SEIS relief becomes so attributable under section
257HB, the old shares for which they were exchanged were
transferred to the individual as mentioned in section 257H.

(4) This Part has effect in relation to any subsequent disposal or other
event as if—

(a) 40the new shares had been subscribed for by the individual at
the time when, and for the amount for which, the old shares
were subscribed for,

(b) the new shares had been issued by the new company at the
time when the old shares were issued by the old company,

(c) 45the claim for SEIS relief made in respect of the old shares had
been made in respect of the new shares, and

(d) the individual’s liability to income tax had been reduced in
respect of the new shares for the same tax year as that for

which the liability of the individual who subscribed for the
old shares was so reduced in respect of those shares.

Nominees etc

257HE Nominees and bare trustees

(1) Shares subscribed for, issued to, held by or disposed of for an
5individual by a nominee are treated for the purposes of this Part as
subscribed for, issued to, held by or disposed of by the individual.

(2) If shares have been issued to a bare trust for two or more
beneficiaries, this Part has effect (with the necessary modifications)
as if—

(a) 10each beneficiary had subscribed as an individual for all of
those shares, and

(b) the amount subscribed by each beneficiary was equal to the
total amount subscribed on the issue of those shares divided
by the number of beneficiaries.

(3) 15In subsection (2) “shares” means shares which meet the requirements
of section 257CA(2).

Interpretation

257HF Meaning of “new qualifying trade”

(1) For the purposes of this Part a qualifying trade carried on by the
20issuing company or a qualifying 90% subsidiary of that company
(“the relevant company”) is a “new qualifying trade” if (and only
if)—

(a) the trade does not begin to be carried on (whether by the
relevant company or any other person) before the two year
25pre-investment period, and

(b) at no time before the relevant company begins to carry on the
trade was any other trade being carried on by the issuing
company or by any company that was a 51% subsidiary of the
issuing company at the time in question.

(2) 30In this section—

• “qualifying trade” has the same meaning as in Part 5 (see
  sections 189 and 192 to 200);

• “two year pre-investment period” means the period of 2 years
  ending immediately before the day on which the relevant
  35shares are issued.

257HG Meaning of “qualifying business activity”

(1) In this Part “qualifying business activity”, in relation to the issuing
company, means—

(a) activity A, or

(b) 40activity B,

if it is carried on by the company or a qualifying 90% subsidiary of
the company.

This is subject to subsection (3).

(2) Activity A is—

(a) the carrying on of a new qualifying trade which, on the date
the relevant shares are issued, the company or a qualifying
90% subsidiary of the company is carrying on, or

(b) 5the activity of preparing to carry on (or preparing to carry on
and then carrying on) a new qualifying trade—

(i) which, on that date, is intended to be carried on by the
company or such a subsidiary, and

(ii) which is begun to be carried on by the company or
10such a subsidiary.

(3) Activity B is the carrying on of research and development—

(a) which, on the date the relevant shares are issued, the
company or a qualifying 90% subsidiary of the company is
carrying on, or which the company or such a subsidiary
15begins to carry on immediately afterwards, and

(b) from which, on that date, it is intended—

(i) that a new qualifying trade which the company or
such a subsidiary will carry on will be derived, or

(ii) that a new qualifying trade which the company or
20such a subsidiary is carrying on, or will carry on, will
benefit.

(4) For the purposes of subsection (3)(a), when research and
development is begun to be carried on by a qualifying 90%
subsidiary of the issuing company, any carrying on of the research
25and development by it before it became such a subsidiary is ignored.

(5) References in subsection (2)(b)(i) or (3)(b) to a qualifying 90%
subsidiary of the issuing company include references to any existing
or future company which will be such a subsidiary at any future
time.

257HH 30 Meaning of “disposal of shares”

(1) In this Part references to a disposal of shares include a reference to a
disposal of an interest or right in or over shares.

(2) An individual is to be treated, for the purposes of this Part, as
disposing of any shares which the individual is treated by virtue of
35section 136 of TCGA 1992 as exchanging for other shares.

257HI Meaning of “issue of shares”

(1) In this Part—

(a) references (however expressed) to an issue of shares in any
company are to such of the shares in the company as are of
40the same class and issued on the same day, and

(b) references (however expressed) to an issue of shares in any
company to an individual are to such of the shares in the
company as are of the same class and are issued to the
individual in one capacity on the same day.

(2) 45Subsection (1)(b) has effect subject to sections 257E(6), 257EA(2),
257FB(2) and 257FK(1).

257HJ Minor definitions

(1) In this Part—

• “arrangements” includes any scheme, agreement,
  understanding, transaction or series of transactions (whether
  5or not legally enforceable);

• “associate” has the same meaning as in Part 5 (see section 253);

• “bonus shares” means shares which are issued otherwise than
  for payment (whether in cash or otherwise);

• “director” is read in accordance with section 452 of CTA 2010;

• 10“EIS relief” means relief under Part 5;

• “group” means a parent company and its qualifying
  subsidiaries;

• “group company”, in relation to a group, means the parent
  company or any of its qualifying subsidiaries;

• 15“ordinary shares” means shares forming part of a company’s
  ordinary share capital;

• “parent company” means a company that has one or more
  qualifying subsidiaries, and “single company” means a
  company that does not;

• 20“permanent establishment” has the same meaning as in Part 5
  (see section 191A);

• “qualifying subsidiary” has the same meaning as in Part 5 (see
  section 191);

• “qualifying 90% subsidiary” has the same meaning as in Part 5
  25(see section 190);

• “research and development” has the meaning given by section
  1006.

(2) Section 252 (meaning of a company being “in administration” or “in
receivership”) applies for the purposes of this Part.

(3) 30Section 995 (control) does not apply for the purposes of the following
provisions—

(a) section 257DG(1)(a),

(b) section 257FP,

(c) section 257FQ,

(d) 35section 257GH(4);

and in those provisions “control” is to be read in accordance with
sections 450 and 451 of CTA 2010.

(4) In this Part—

(a) references in any provision to the reduction of any SEIS relief
40attributable to any shares include a reference—

(i) to the reduction of the relief to nil, and

(ii) if no relief has yet been obtained, to the reduction of
the amount which apart from that provision would be
the SEIS relief, and

(b) 45references to the withdrawal of SEIS relief in respect of any
shares are—

(i) to the withdrawal of the SEIS relief attributable to
those shares, or

(ii) if no relief has yet been obtained, to ceasing to be
eligible for SEIS relief in respect of those shares.

(5) For the purposes of this Part shares in a company are not treated as
being of the same class unless they would be so treated if dealt in on
5a recognised stock exchange.

(6) For the purposes of this Part the market value at any time of any asset
is the price which it might reasonably be expected to fetch on a sale
at that time in the open market free from any interest or right which
exists by way of security in or over it.

(7) 10In this Part—

(a) references to SEIS relief obtained by an individual in respect
of any shares include a reference to SEIS relief obtained by
the individual in respect of those shares at any time after the
individual has disposed of them, and

(b) 15references to the withdrawal or reduction of SEIS relief
obtained by an individual in respect of any shares include a
reference to the withdrawal or reduction of SEIS relief
obtained by the individual in respect of those shares at any
time.

(8) 20In the case of requirements that cannot be met until a future date,
references in this Part to requirements being met for the time being
are to nothing having occurred to prevent their being met.”

Part 2 Relief for capital gains

25Introductory

2 TCGA 1992 is amended as follows.

Disposal of shares to which SEIS relief is attributable

3 Before section 151 insert—

“150E Seed enterprise investment scheme

(1) 30For the purpose of determining the gain or loss on any disposal of
shares by an individual where—

(a) an amount of SEIS relief is attributable to the shares, and

(b) apart from this subsection there would be a loss,

the consideration given by the individual for the shares is to be
35treated as reduced by the amount of the relief.

(2) Where—

(a) shares are disposed of by an individual after the end of the
period referred to in section 257AC(2) of ITA 2007,

(b) an amount of SEIS relief is attributable to the shares, and

(c) 40(apart from this subsection) there would be a gain,

the gain is not a chargeable gain.