Taxpayer beware! SEIS & EIS Tax Relief clawbacks under review

HMRC letter and coins
Posted 2021 by Jane Loxton

HMRC has been in correspondence with the Chartered Institute of Taxation notifying its intention to write to investors in SEIS and EIS companies, where the investor may not be aware that the Company ceased to qualify for relief and taxpayer relief may need to be partially or wholly withdrawn.

In cases of failure, it is a requirement that the company notify HMRC and the investors, and then the investor can apply for a special assessment to be made to settle the consequential tax liability.

This letter is the template HMRC will use. They will write to investors who have been impacted by a company failure which occurred prior to 1 August 2019 to ascertain the information needed to make the assessment.

Those in receipt of an assessment will need to take advice to consider the Capital Gains Tax consequences, as well as the Income Tax withdrawal consequences and HMRC may seek to charge penalties.

It is sometimes the case that the company hasn’t notified the investor, or the investor may have been notified but wasn’t aware there were tax implications.

Next steps

At UHY Ross Brooke, we regularly handle SEIS and EIS matters, as well as HMRC investigations. If you are affected, then please get in touch and we would be happy to advise you.