S.E.I.S. - Seed Enterprise Investment Scheme

No amount of tax 'sweetener' can turn a bad investment into a good one...only lessen the bitterness when it turns sour. Avoid having your tax relief withdrawn. Choose a company that understands and complies with complex E.I.S. regulations. Whilst there can be no pre-arranged agreement for realising mature EIS shares, it will be some consolation to know that Accolade has a viable investor exit strategy.

In his Autumn Statement 2011, Chancellor George Osborne announced the creation of SEIS - the Seed Enterprise Investment Scheme. This extreme version of EIS is currently under review as draft legislation to be published in his Budget Speech on 21st March 2012. An extract of the draft document is shown below, taken verbatim from the Treasury website. Press speculation that "it's too good to be true" awaits confirmation in the Bill itself and during its subsequent passage through Parliament.

Accolade's opinion is that SEIS is being driven by a Government needing 'to be seen to be doing something!' The 2011 increase in EIS Income Tax relief from 20 to 30% was so well received that George thought to push the boat out further. In doing so, he reckoned without the Revenue's ability to row back against Government tides.

At the risk of mixing liquid metaphors, rumour has it the draft legislation is already being watered down by HMRC. Relaxation of rules about family investors being an early fatality; (drowned?). It's reminiscent of 1980's Profit Related Pay Schemes which became a casualty of their own success...to the detriment of employees! 

Tax relief goes up in smokeHMRC are taking a strong stance against Seed Enterprise Investment Schemes being exploited as a tax loophole. 

Their already robust approach in disallowing some 'suspect' Enterprise Investment Schemes will be reinforced with regard to ALL Seed Enterprise Investment Schemes. 

Your investment goes up in smoke if HMRC withdraw tax relief because they have unfavourably reviewed an E.I.S. 

Small print in the draft legislation states that 70% of Seed EIS funds have to be spent BEFORE any claim for tax relief can be made! There are >60 pages of exceptions & conditions that will prevent artificial investments and tax evasion.

The uncertainty surrounding SEIS should invoke caution amongst investors tempted by tantalising rebates. Don't let a tax incentive 'tale' wag the investment dog! 

50% of business start-ups fail within 12 months; 95% in 5 years. Tax breaks can't turn a bad investment into a good one...only lessen the pain if it doesn't succeed.

Accolade has been established since 1980 and successfully trading over 35 years. Backers continually re-invest in our EIS, allowing us to develop a website fit for the purpose of business to business internet trading. Such small scale, yet highly tax-efficient investments, should be at the core of Enterprise Investment Schemes.

The value of Accolade's Enterprise Investment Scheme, which has been approved and operating successfully since 2003, should not be under-estimated. Accolade's 'investor exit strategy' of encouraging employees to become shareholders via buying mature E.I.S. shares ensures the long-term sustainability of our business.

Accolade Office Europe...as an employee owned partnership...we try harder

Accolade Office - Enterprise Investment Scheme opens to investors - 2015

Phone 0141 774 4600 to check availability of this 30% tax saving EIS

An Enterprise Investment Scheme is by far the best way of exploiting tax breaks

^-<-< Use this Form or the 'Contact Us' page for more information about our EIS

Email a link to this page 'SEIS Seed E.I.S.' 

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Directors, Partners or Staff at Accolade Office Europe Limited can NOT give information about any Enterprise Investment Scheme other than our own. Please consult your Independent Financial Advisor or other Qualified Practitioner for advice about EIS. Or, see below for HMRC SCEC details.

Specialist staff at HM Revenue & Customs Small Company Enterprise Centre (SCEC) are Small Company untangles taxing problemavailable to give general advice on the workings of E.I.S. (Enterprise Investment Schemes). The inclusion of their address on this page is purely as a convenience to people seeking information about EIS. In no way should the provision of the S.C.E.C. contact details be interpreted as any form of HMRC endorsement for the above Accolade Enterprise Investment Scheme. Revenue & Customs cannot and will not give an opinion on any Enterprise Investment Scheme.

SCEC contact details are:

Small Company Enterprise Centre
HM Revenue & Customs
1st Floor, Ferrers House
Castle Meadow Road

Phone: 0115 974 1250
Fax: 0115974 29 54

Small Company tries to untangle taxing problem

The SEIS extract below is copied verbatim from www.HM-Treasury.gov.uk. It can be found on their site by browsing via the tab called 'Autumn Statement' then in the left margin 'Consultations & Legislation' then under the heading 'Personal Tax' then go to the pdf 'Seed Investment Scheme'.

Seed Enterprise Investment Scheme

Who is likely to be affected?

Smaller, early stage companies raising equity, and individuals investing in such companies.

General description of the measure

This measure introduces a new tax-advantaged venture capital scheme, similar to the Enterprise Investment Scheme (EIS).

The new scheme  the Seed Enterprise Investment Scheme (SEIS)  will be focused on smaller, early stage companies carrying on, or preparing to carry on, a new business in a qualifying trade. The scheme will make available tax relief to investors who subscribe for shares and have a stake of less than 30 per cent in the company.

The relief will apply to investments made on or after 6 April 2012.

For the first year of the new scheme, the Government will offer a capital gains tax (CGT) holiday gains realised on the disposal of assets in 2012-13 that are invested through SEIS in the same year will be exempt from CGT.

Policy objective

The measure will support the Government's growth agenda by helping smaller, riskier, early stage UK companies, which may face barriers in raising external finance, to attract investment, making it easier for these companies to be established and to grow.

Background to the measure.

The Government announced at Budget 2011 that it would bring forward proposals to support investment in smaller, early stage companies.  A consultation document, Tax-advantaged venture capital schemes: a consultation was published on the Treasury website on 6 July 2011 setting out in detail a number of design issues concerning the new scheme. The Government's consultation response document was published on 6 December 2011.

Detailed proposal

Operative date

The relief will apply to shares issued on or after 6 April 2012. 

Current law 

The EIS legislation is in Part 5 of the Income Tax Act (ITA) 2007. Sections 150A and 150B of the Taxation of Chargeable Gains Act 1992 make provision for exemption from capital gains tax of gains on disposals of shares in companies within the scope of the EIS.  Schedule 5B of that Act provides for deferral of gains on disposals of assets where those gains are reinvested in shares under the EIS.

Proposed changes

Legislation will be included in Finance Bill 2012 to provide for a new tax advantaged venture capital scheme. This will:

apply to smaller companies, those with 25 or fewer employees and assets of up to £200,000, which are carrying on or preparing to carry on a new business; 

give income tax relief worth 50 per cent of the amount invested to individual investors with a stake of less than 30 per cent in such companies, including directors who invest in their companies;

apply to subscriptions for shares, using the same definition of eligible shares as EIS (which it is proposed will be widened in Finance Bill 2012);

apply to an annual amount of investment of £100,000 per investor, with unused annual amounts able to be carried back to the previous year, as under EIS;

provide for relief within an overall tax favoured investment limit of £150,000 for the company. To give the greatest degree of flexibility, this will be a cumulative limit, not an annual limit; 

provide for an exemption from CGT on gains on shares within the scope of the SEIS; and,

provide for an exemption from CGT on gains realised from disposals of assets in 2012-13, where the gains are reinvested through the new SEIS in the same year. 

95. If you have any questions about this change, or comments on the legislation, please contact Kathryn Robertson on 020 7147 2589 (email: kathryn.robertson@hmrc.gsi.gov.uk) or Des Ryan on 020 7147 0818 (email: des.ryan@hmrc.gsi.gov.uk). 

Clean up your Act, Chancellor !

Clean up your Act, Chancellor !!

SEIS Act has more than 60 pages of proposed exceptions & conditions.

e.g. 70% Seed EIS capital subscribed must be spent BEFORE tax relief is claimed

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An Enterprise Investment Scheme is an appropriate venture for UK income tax payers who can self-certify being a sophisticated investor.
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