SEIS income tax and reinvestment relief carry-back

What is the best mechanism? Amend Tax Return or submit as stand-alone?

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Completing a client's 2019/20 Tax Return. Subscriped for SEIS shares during the year. Wishes to carry back to 2018/19 to claim CGT reinvestment relief.

What is the recommended mechanism for claiming? Amending the 2018/19 Tax Return, or via a stand-alone claim to HMRC by submitting the SEIS3 directly? Or does it not matter?

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By Geoff56
20th Jan 2021 09:58

Something very similar happened to me three years ago, although my carry back claim was for income tax relief. I thought that amending the previous year's return seemed a much quicker and simpler option, but the notes attached to the SEIS3 clearly indicated that you should submit a stand-alone claim.

I phoned HMRC and the call handler spoke to a technical inspector, who explained that the adjustment had to be made by manual intervention, because it was an election under S.257ab, Income Taxes Act 2007. (I think I wrote that down correctly!) That's why it needs to be a stand-alone claim.

I pointed out that the notes said if the previous year's return has not yet been submitted, you can make the claim via the return; so why can't we just file an amendment? The call handler saw my point and offered to go back to the Inspector but by this time, I had lost the will to live.

I submitted the stand-alone claim which was dealt with, within a few weeks as I recall. If it were to happen to me again, I would be strongly tempted to use the amendment route, bearing in mind that HMRC seems to be taking months to deal with letters these days.

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