The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) give generous income and capital gains tax relief to individuals who invest in small early stage businesses. In his March 2014 Budget, the Chancellor confirmed that the SEIS and the accompanying capital gains tax 50% reinvestment relief have now both been made permanent.
The government is also exploring options for the tax reliefs to apply where individuals make investments in the form of convertible loans. Investee businesses need to demonstrate that they meet all the qualifying requirements both at the time of the investment and for a three year period following the investment.
If the company is deemed to fail any of the qualifying requirements the tax benefits available to the individual investors are jeopardised so it is imperative that companies respect all the qualifying criteria. MMP is very experienced at helping companies clarify their EIS/SEIS qualifying status with HMRC’s Small Company Enterprise Centre (SCEC) which administers the schemes.
MMP also made detailed comments in the HMRC consultation which had significant impact on the eventual structure of the new SEIS prior to its launch in April 2012.