VCM35070 | Venture Capital Schemes Manual: the Seed Enterprise Investment Scheme: income tax relief: company and investor procedures: company procedures: HMRC examining the compliance statement SEIS1

After the company has submitted its compliance statement using the SEIS1 form, HMRC checks to ensure:

• the information given on form SEIS1 is correct, and

• there is no reason not to accept the declaration given on the form.

HMRC may ask for further information where it is not clear that the company meets the conditions to be a qualifying company.

HMRC does not consider the identity of the investors at this stage, who are required to meet additional conditions based on their personal circumstances. These further conditions are considered as part of the investor’s claim to tax relief see VCM35160.

If HMRC is satisfied that the company meets the qualifying conditions, it must give the authorisation even if none of the subscribers listed are likely to be able to obtain relief (see Wild v Cannavan, 70TC554).

Interaction with advance assurance

In examining the statement the officer will consider whether any of the information supplied at any stage has proved inaccurate, including in relation to any advance assurance provided, and will explore any matters about which unsupported statements were originally accepted. Any changes to documents or conditions on which the advance assurance was given must be clearly highlighted. Where only draft documents were previously seen (for example, a draft prospectus), HMRC will require the final documents for their review.

As with the giving of advance assurances, HMRC is normally bound by a decision to authorise relief, so the company’s statement will be considered very carefully and any necessary clarification obtained before a decision is made.

Under ITA07/S257EF the furnishing of a false statement attracts a penalty. The maximum penalty is £3,000.

Value received

If form SEIS1 shows that any of the listed subscribers, or any associate of such a person, has received value, the implications of this for the availability of relief need to be considered. (See VCM32020 for meaning of associate.)

In any case where the amount of income tax relief that might be claimed by any subscriber will be affected the HMRC officer and the company should agree the amount to be recorded on the form SEIS3 to be issued to that subscriber.