A wind turbine manufacturer blew its chance of qualifying for the Seed Enterprise Investment Scheme (SEIS) after a clerical error caused HMRC to refuse their application.
X-Wind Power claimed it mistakenly submitted the wrong form, but its appeal was dismissed when it reached the first tier tribunal.
The firm's representative, Iain MacKinnon admitted to the court that the managing director’s personal assistant made an ‘innocent error’ by unwittingly completing the Enterprise Investment Scheme (EIS) form, instead of the SEIS form, and the MD did not realise this mistake before signing.
When X-Wind attempted to apply for the correct SEIS complaince certificate, HMRC rejected the request, as it had previously submitted the EIS investment; a restriction imposed by the provisions of ITA s 257DK(1)(a).
While the two schemes share similarities, the rate of relief differs. The SEIS relief scheme offers the more generous 50% relief, aimed at attracting investors during the early, difficult stages of start-up companies, while the EIS scheme is used to entice further investment, with 30% relief.
Failing to persuade the Revenue to accept the SEIS compliance statement in place of the originally submitted EIS request, the firm raised the matter to a formal review.
Explaining HMRC’s position, presenting officer Karen Powell told the tribunal how there is no provision in the legislation for the rectification of an error. She explained, once the EIS authorisation had been granted, HMRC could not retrospectively withdraw of the original application.
MacKinnon argued that despite the clerical error, HMRC should have concluded based on the differences in the two schemes that the form was intended as SEIS, rather than EIS. However, the judge backed the HMRC officer, who was faced with an EIS compliance statement and a covering letter.
In conclusion, the tribunal judge Colin Bishop said: “As HMRC, in my judgment correctly, say, that is the end of the matter: there is no provision in the legislation for the withdrawal, setting aside, replacement or revocation of a s 205 compliance statement. I accept, as I have said, that the submission of the wrong form was attributable to an innocent error but I am compelled to agree with HMRC that there is nothing they or this tribunal can do to assist X-Wind out of its difficulty.”
Although the judge expressed sympathy for the appellant’s mistake - believing the firm had made a mistake, not in fact changed its minds on the scheme - he ultimately concluded: “It is not, however, within this tribunal’s power to allow an appeal on the ground that the underlying decision, or its consequences, is or are perceived to be unfair: see Revenue and Customs Commissioners v Hok Ltd  UKUT 363 (TCC),  STC 225. 21.
“For the reasons I have given I must, and do, dismiss the appeal.”
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