SEIS Scheme Solicitors

The Seed Enterprise Investment Scheme (SEIS) is a UK government initiative administered by HMRC and designed to help eligible start-ups raise funds by offering investors tax relief on qualifying investments. SEIS is one of the most generous government investment schemes for early-stage businesses, by offering substantial tax savings to investors in recognition of risk. Subject to the relevant conditions being met, investors can benefit from Income Tax relief of 50% on qualifying investments, together with potential capital gains tax advantages

We offer a starter pack, discussed below, to help your investors assess whether your business is likely to qualify for SEIS tax relief. This can provide greater confidence for potential investors and help encourage investment.

The SEIS fixed-fee starter pack

We offer a service covering the practical steps involved in seeking SEIS investment, covering:

• A step-by-step guide to handling the investment procedure;
• Preparing the letter and supporting information for submission to HMRC when seeking SEIS Advance Assurance. Many businesses also seek EIS Advance Assurance at the same time, where appropriate, so that they are prepared for a future EIS fundraising round once the SEIS limit has been used;
• A checklist of the documents and information HMRC is likely to require;
• An initial review of the business against the key SEIS/EIS qualifying requirements. Our starter package covers the basics and assumes that the trade and business qualifies for SEIS/EIS. We are more than happy to deal with specific technical questions and provide a separate quote where additional work is required.

If you are not certain whether your trade will qualify under the SEIS/EIS legislation, we can assist with an application for Advance Assurance from HMRC. We can provide a fixed-fee quote once we know more about your business and the proposed investment.

SEIS Scheme - the basics

SEIS investments are subject to a number of requirements applying to both the company and the investor. You need to think about:

• The company - does the company meet the eligibility requirements for SEIS?
• The investor - will they qualify for SEIS tax relief?

Some of the most important things to know about an SEIS investment include:

• SEIS can provide an immediate Income Tax saving for the investor - investors can generally claim income tax relief at 50% of the amount subscribed for qualifying shares, subject to the applicable conditions and the annual investment limit. For example, if an investor subscribes £30,000 under SEIS, they may be able to receive a refund from HMRC of £15,000 for the tax year the money is invested.
• What happens when the SEIS shares are sold? - where the relevant conditions are met, a gain on the disposal of qualifying SEIS shares may be exempt from capital gains tax if the shares have been held for at least three years and the SEIS income tax relief has not been withdrawn. This means the tax treatment can be significantly more favourable than for an equivalent non-SEIS investment.
• Qualification for SEIS - not all companies or businesses can qualify for SEIS, as there are requirements around the company's activities, age, size, structure and the use of the funds raised. Among other requirements, the company must generally have been trading for less than three years from its first commercial sale, must satisfy the gross-assets requirements and must not be a subsidiary in circumstances prohibited by the SEIS rules. Certain activities, including some property and financial activities, are excluded from SEIS. Where there is uncertainty about qualification, we can advise on the position and, where appropriate, assist with an Advance Assurance application to HMRC.

Next Steps

Once the fundraising has been structured and, where appropriate, Advance Assurance has been obtained, we can help with processing the subscriptions for shares. There are rules around the timing of the investment, the issue of shares and the use of funds raised, which we will guide you through.

We can also advise on the corporate documentation required to implement the investment and the ongoing compliance requirements for maintaining SEIS relief.