Income Tax Act 2007 (c. 3)

[F1 PART 5A U.K. Seed enterprise investment scheme

Textual Amendments

F1 Pt. 5A inserted (17.7.2012) (with effect in accordance with Sch. 6 para. 24(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 6 para. 1

Modifications etc. (not altering text)

C1 Pt. 5A applied by Taxation of Chargeable Gains Act 1992 (c. 12), Sch. 5BB para. 8(4) (as inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 6 para. 5)

CHAPTER 6 U.K. Withdrawal or reduction of SEIS relief

Introduction U.K.

257F Overview of Chapter U.K.

This Chapter provides for SEIS relief to be withdrawn or reduced under—

(a) section 257FA (disposal of shares),

(b) section 257FC (call options),

(c) section 257FD (put options),

(d) section 257FE (value received by the investor),

(e) section 257FP (acquisition of a trade or trading asset),

(f) section 257FQ (acquisition of share capital), and

(g) section 257FR (relief subsequently found not to have been due).

257FA Disposal of shares U.K.

(1) This section applies if—

(a) the investor disposes of any of the relevant shares,

(b) the disposal takes place before period B ends, and

(c) SEIS relief is attributable to the shares.

(2) If the disposal is not made by way of a bargain made at arm's length, the SEIS relief attributable to the shares must be withdrawn.

(3) If the disposal is made by way of a bargain made at arm's length, the SEIS relief attributable to the shares must—

(a) if it is greater than the amount given by the formula set out below, be reduced by that amount, and

(b) in any other case, be withdrawn.

The formula is—

where—

R is the amount or value of the consideration received by the investor for the shares, and

SEISR is the SEIS rate.

(4) This section does not apply to a disposal of shares to which an amount of SEIS relief is attributable if—

(a) the disposal was made by an individual (“A”) to another individual (“B”), and

(b) A and B were married to, or were civil partners of, each other and living together at the time of the disposal.

(5) Section 257HA contains rules for determining which shares of any class are treated as disposed of for the purposes of this section if the investor disposes of some but not all of the shares of that class which are held by the investor.

(6) Nothing in this section applies to a disposal of shares occurring as a result of the investor's death.

257FB Cases where maximum SEIS relief not obtained U.K.

(1) If the investor's liability to income tax is reduced for any tax year in respect of any issue of shares and—

(a) the amount of the reduction (“A”), is less than

(b) the amount (“B”) which is equal to tax at the SEIS rate on the amount on which the investor claims SEIS relief in respect of the shares,

section 257FA(3) has effect in relation to a disposal of any of the shares as if the amount or value referred to as “R” were reduced by multiplying it by the fraction—

(2) If section 257AB(1) and (2) applies in the case of any issue of shares as if part of the issue had been issued in a previous tax year, subsection (1) has effect as if that part and the remainder were separate issues of shares (and that part had been issued on a day in the previous tax year).

(3) If the amount of SEIS relief attributable to any of the relevant shares has been reduced before the SEIS relief was obtained, the amount referred to in subsection (1) as A is to be treated for the purposes of that subsection as the amount that it would have been without that reduction.

(4) Subsection (3) does not apply to a reduction of SEIS relief by virtue of section 257E(4) (attribution of SEIS relief if there is a corresponding issue of bonus shares).

257FC Call options U.K.

(1) This section applies if the investor grants an option which, if exercised, would bind the investor to sell any of the relevant shares.

(2) The grant of the option is treated for the purposes of section 257FA as a disposal of the shares to which the option relates.

(3) Nothing in this section prejudices section 257CD (no pre-arranged exits).

257FD Put options U.K.

(1) This section applies if, at any time in period A, a person grants the investor an option which, if exercised, would bind the grantor to purchase any of the relevant shares.

(2) Any SEIS relief attributable to the shares to which the option relates must be withdrawn.

(3) For the purposes of subsection (2) the shares to which an option relates are those which, if—

(a) the option were exercised immediately after the grant, and

(b) any shares in the issuing company acquired by the investor after the grant were disposed of immediately after being acquired,

would be treated for the purposes of section 257FA as disposed of in pursuance of the option.]