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What is SEIS3/EIS3 Compliance Certificate?

An SEIS3 or EIS3 compliance certificate is a document issued by HMRC to individual investors confirming that the shares they purchased qualify for SEIS or EIS tax relief. Investors need this certificate to claim income tax relief on their Self Assessment return.

Example

After your company issues shares and files the SEIS1 compliance statement, HMRC sends an SEIS3 certificate to each investor. Investor Jane receives her SEIS3 showing she invested £50,000. She enters the details on her Self Assessment return and claims £25,000 income tax relief (50%).

How SEIS3/EIS3 Compliance Certificate Works in Practice

The compliance certificate system is HMRC's mechanism for verifying and documenting that an investment qualifies for SEIS or EIS tax relief. The process involves two forms: the compliance statement (SEIS1/EIS1) submitted by the company, and the compliance certificate (SEIS3/EIS3) issued by HMRC to individual investors. Understanding the distinction between these forms and the timeline is essential for both companies raising investment and the investors claiming relief.

The SEIS1 or EIS1 is a compliance statement that the company submits to HMRC after shares have been issued. It contains details of the company, the qualifying trade, each share issue, and each investor. The company declares that all the relevant conditions are met. This is a company-level filing, prepared and submitted by the company (or its advisers), not by the investors.

The SEIS3 or EIS3 is the compliance certificate that HMRC issues to individual investors after reviewing the company's compliance statement. Each investor receives their own certificate showing the date of the share issue, the number of shares, and the amount invested. The investor uses this certificate to claim SEIS or EIS income tax relief on their Self Assessment tax return. Without a valid SEIS3/EIS3 certificate, the investor cannot claim the relief.

The timeline from share issue to investors receiving their certificates is typically 8-12 weeks: the company files the SEIS1/EIS1 (which they should do promptly after the share issue), HMRC processes it (typically 4-6 weeks), and then certificates are issued. This means investors may need to wait several months before they can claim their tax relief, which should be communicated clearly at the outset.

Step by Step

After the share issue is complete, the company files the SEIS1 (for SEIS) or EIS1 (for EIS) compliance statement with HMRC through the online venture capital schemes service. The form includes full details of each investor and each share issue. HMRC reviews the statement, checking that all conditions appear to be met, and may request additional information or evidence.

Once HMRC is satisfied, it issues individual SEIS3 or EIS3 certificates. These are sent to the company, which then distributes them to the relevant investors. Each certificate contains a unique reference number and the details the investor needs to complete the SEIS/EIS section of their Self Assessment return. The investor can claim relief for the tax year in which the shares were issued, or elect to carry the relief back to the previous tax year if the shares were issued before 6 October in the current tax year.

Practical Tips

File the SEIS1/EIS1 compliance statement within 4 weeks of the share issue to minimise the delay for investors waiting for their certificates
Collect all investor details including National Insurance numbers during the subscription process, before shares are issued, to avoid chasing information later
Send a clear communication to investors after the share issue explaining the timeline for receiving their SEIS3/EIS3 certificates and how to use them
Keep copies of all certificates in the company's records and note which investors have been sent which certificates
If an investor needs to file their Self Assessment before the certificate arrives, they can submit the return and then amend it when the certificate is received

Common Mistakes to Avoid

Confusing the SEIS1/EIS1 (company compliance statement) with the SEIS3/EIS3 (investor certificate) - the company files the former, HMRC issues the latter
Delaying the SEIS1/EIS1 filing after share issue, which delays investors receiving their certificates and the ability to claim tax relief
Not collecting investor National Insurance numbers before the share issue, which is required on the SEIS1/EIS1 and causes delays when chased after the fact
Investors attempting to claim relief on their Self Assessment before receiving the SEIS3/EIS3 certificate, which HMRC will reject
Losing the SEIS3/EIS3 certificate and not knowing that replacement copies can be requested from HMRC via the company

Frequently Asked Questions

Who files the SEIS1/EIS1 compliance statement?

The company files it, not the investor. A director or the company secretary must sign the declaration confirming all conditions are met. Many companies have their accountant prepare and submit it on their behalf.

How long does it take to get SEIS3/EIS3 certificates?

From the date the SEIS1/EIS1 is submitted, HMRC typically takes 4-6 weeks to process and issue certificates. Including time for the company to prepare and submit the compliance statement after the share issue, investors typically receive certificates 8-12 weeks after the shares were issued.

Can an investor carry back SEIS/EIS relief to the previous tax year?

Yes. If the shares were issued before 6 October in the current tax year, the investor can elect to carry back some or all of the relief to the previous tax year. This is particularly useful for investors who had a high tax year and want to reduce their previous year's liability.

What happens if the SEIS1/EIS1 is rejected by HMRC?

HMRC will write to the company explaining the reasons for rejection. Common reasons include the trade not qualifying, conditions not being met, or incomplete information. The company can address the issues and resubmit. If the fundamental conditions are not met, investors will not receive certificates and cannot claim relief.

Source: HMRC VCM30130 - Compliance Certificates

SEIS is a UK government scheme that offers investors 50% income tax relief, CGT exemption, and loss relief when they invest in qualifying early-stage companies. Companies can raise up to £250,000 under SEIS.

EIS (Enterprise Investment Scheme)

EIS is a UK government scheme that offers investors 30% income tax relief, CGT deferral, CGT exemption after 3 years, and loss relief when they invest in qualifying companies. Companies can raise up to £5 million per year under EIS.

SEIS/EIS Advance Assurance

Advance assurance is a confirmation from HMRC that a company should meet the conditions for SEIS or EIS, based on the information provided. It gives investors confidence that their investment will qualify for tax relief before they commit their money.

Qualifying Trade (SEIS/EIS)

A qualifying trade is a trade that is eligible for SEIS and EIS tax relief. The legislation works on an exclusion basis: most trades qualify unless they are on the list of specifically excluded activities such as property development, financial services, and legal or accountancy services.

Share Premium

Share premium is the amount paid by investors for shares above their nominal (par) value. It is recorded in a separate share premium account on the balance sheet and has legal restrictions on how it can be used.

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