Can you issue SEIS shares before getting SEIS confirmation from HMRC?

Innovative

This is a common question. The answer is, yes, absolutely. Not only it is possible, but it is the only sensible, practical way to issue shares.

What makes shares SEIS shares is not the issue process (though they do need to be issued properly, following the due process), nor is it the Assurance Advance form, which is just a relatively informal nod to confirm that there isn’t anything in the paperwork that you’ve submitted which actively disqualifies the company.

In fact, the concept of shares being “SEIS shares” or not is somewhat irrelevant. What’s relevant is whether your investors can get the SEIS relief on those shares, and that depends on a number of factors.

When can investors get SEIS relief?

Investors can get the SEIS relief only when all the following conditions apply:

  1. The shares were issued properly and paid promptly.
  2. The company has issued a compliance statement to HMRC.
  3. HMRC has replied positively and thereby authorised step 4.
  4. The company has issued a compliance certificate to its investors.
  5. The investor was due to pay enough tax during the tax year when they were issued.
  6. The investor has included the compliance certificate along with the relevant tax adjustments in their personal tax statement at the end of the year.

If all these things are true, then the investors should get whatever tax relief they’re entitled to. For step 5, it’s worth adding that the only way to get the full 78% tax relief is to be paying lots of taxes already, both income taxes and capital gains taxes. If the investor is not paying any CGT (which may happen), they can’t get the full relief, since part of the relief applies only to Capital Gains Tax due that year.

So, can you issue the shares before getting SEIS approval? Not only you can, but you must. Doing otherwise is practically impossible.

Some investors may insist on you having obtained advance assurance from HMRC, but that’s not a requirement of HMRC – only of the investors.

Hopefully, this clears things up!

Categories

TWITTER

 
GrantTree  @GrantTree,Nov 28
Puzzled about the R&D Tax Credits and Grants relationship? Need insight about how to successfully access both? https://t.co/JVDoxT6zam 
GrantTree  @GrantTree,Nov 24
We unpick what yesterday's Autumn Statement means for the future of R&D in Britain and how it impacts your business. https://t.co/2XP90BmL4Q 
GrantTree  @GrantTree,Nov 23
RT @Payah:good news for @GrantTree friends and clients! https://t.co/8lAbYYUcaG 
GrantTree  @GrantTree,Nov 07
The age old question (well in R&D Tax Credits anyway!): should you file with your accountant or a specialist? https://t.co/HEChpmvvNM 
GrantTree  @GrantTree,Nov 03
RT @BizAdvice_UK:Find out which tax credits and reliefs you are eligible for as an #entrepreneur. https://t.co/Z141n2icPq https://t.co/zkO6TS2W5Q