Congratulations on your investment into a Seed Enterprise Investment Scheme qualifying company!  As an informed investor you must have understood and appreciated the multitude of incentives this investment structure offers, such as upfront 50% income tax relief, capital gains deferral, inheritance tax relief and many more (as highlighted in my earlier blog "Seed Enterprise Investment Schemes - 6 ways for investors to save tax").  Now that the investment has been made you must be wondering what happens next and what you need to do to avail of the scheme and get your tax back.

1) Make sure the money is received by the company.

Once the SEIS investment is made, the company receives the money in their company bank account. The company’s directors should ensure that the investment monies have been received and cleared in the company bank account. If the money is provided by cheque for example, it may be required for the company to wait five business days until the cheque has definitely cleared.  Once it is confirmed that the money is in the company bank account, shares are ready to be issued.

2) Hold a company board meeting.

The company should then hold a board meeting to approve the issue of the shares to you and any other SEIS investor(s). The minutes of the meeting should specifically make note of the fact that the money has been received and has cleared in the company bank account and that the directors approve the issue of shares.

3) Issue the shares.

Upon completion of the board meeting, the company then issues the shares to the investor(s).

4) Spend 70% of the money or trade for four months.

After, either (1) spending 70% of the total SEIS monies or (2) four months of trading by the company, the company should complete the SEIS Compliance Statement, attached here. The SEIS Compliance Statement, commonly referred to as the “SEIS 1 Form” is required to be submitted to HMRC under Section 257ED of the Income Tax Act 2007. We can assist with this step; however you can give it an initial try to complete it yourself as you will have all the information necessary.

Once the SEIS 1 Form is completed it should be sent to HMRC. HMRC will review the form and double check to ensure that the company still qualifies for SEIS.

5) SEIS 2 and 3 forms.

If HMRC concludes that the company still qualifies for SEIS status, HMRC will send out a second form to you, the SEIS 2 Form, which will include a SEIS certificate, referred to as the SEIS 3 Form.

6) Claim your tax refund.

You (or your accountant) can then submit the SEIS 3 form to HMRC in order to make a claim to refund tax from your tax office. Hopefully you will receive your tax refund(s) shortly thereafter.

The good news is that HMRC has a streamlined the process to attain the SEIS benefits promised and it can be done simply and efficiently. However, if you do get bogged down with the process we are always happy to help out.  Feel free to contact us for further information at vasiliki@sapphirecapitalpartners.co.uk. We are always happy to help.