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SEIS Reinvestment Relief

Periods allowable

Since13/14 it has been possible to treat a purchase of SEIS shares as having been made in the previous tax year for SEIS relief purposes, potentially saving up to £50,000 tax in the immediately preceding year.

If, in the year of investment, a capital gain is realised, then reinvestment relief can be claimed to mitigate capital gains tax, provided SEIS Income Tax Relief has been claimed.

Q. If a capital gain is realised in the year preceding the investment, and if the SEIS is treated for income tax purposes as having been made in the preceding year, does this then open up reinvestment relief for CG purposes in that prior year?

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15th Jun 2018 12:46

I think it does provided the taxpayer is eligible for and claims SEIS income tax relief in the 'relevant year' (Sch 5BB TCGA '92).

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to I'm Chuck Bass
15th Jun 2018 13:19

the problem I'm having with it is ITA grants the power to treat the subscription as occurring in the earlier year for income tax purposes, but I can see nothing in Sch 5BB TCGA which does the same for CGT purposes. In fact, Sch 5BB appears to define "The relevant year" in a subtly different way to ITA s.257A etc. in that ITA can explicitly include the previous year, whilst TCGA can't.

I am, however, more than happy to be persuaded that I'm wrong. It would be a nice win for the client if I am.

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to SteLacca
15th Jun 2018 13:49

Since the subscription can be treated as being made in the earlier year does it not fulfil Condition B and therefore grant relief? NB Tolley Guidance seems to suggest so.

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to I'm Chuck Bass
15th Jun 2018 14:59

Are you referring to condition B in TCGA? If so, I'm concerned by 1(3)(a), which includes:

"......in respect of an amount subscribed for an issue of shares in a company made to the investor in that year"

And it is those final three words that bother me since, if the "relevant year" is the year in which SEIS relief is claimed for, in the case of a claim deemed to have been made in the preceding year, the shares have not been subscribed for "in that year".

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15th Jun 2018 15:14

Does this help?

/hmrc-internal-manuals/venture-capital-schemes-manual/vcm45010

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to I'm Chuck Bass
15th Jun 2018 15:26

It does, thank you. I'm not convinced it's correct, but that's the basis that HMRC are working on and I'm happy to quote their instructions at them in lieu of the legislation, if it comes to it.

Thank you.

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16th Jun 2018 09:51

Hidden away at the end of Sch 5BB is para8(3) which is the answer you were looking for.

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to chicken farmer
18th Jun 2018 10:02

Excellent, thank you. I hadn't gotten that far.

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