What happens if HMRC rejects advance assurance?

HMRC refusal can delay the investment raise and weaken investor confidence. The share structure and qualifying status may need to be corrected before the capital raise proceeds.

EIS and SEIS - Legend Fusions UK

Q: How do I claim EIS income tax relief on my Self Assessment?

Enter the details from your EIS3 certificate in the Reliefs section of your Self Assessment tax return. The certificate and relief calculation should be reviewed before filing.

Q: What happens to my EIS relief if the company fails?

You may be able to claim loss relief against income or capital gains. The available relief depends on when the shares were acquired, the original relief received and your marginal tax rate.

Q: Can I carry back SEIS relief to the previous tax year?

Yes. SEIS relief can be carried back to the preceding tax year, potentially offsetting income tax from that year. The claim must be made within the applicable filing deadlines.

Q: What triggers loss of EIS or SEIS relief?

Relief may be lost if the qualifying trade conditions fail, the risk-to-capital requirement is breached, connected-party status arises or the qualifying shares are disposed of too early.

Q: What happens after the compliance statement is submitted?

HMRC reviews the compliance statement and supporting evidence. Where accepted, the company can issue the relevant compliance certificates to eligible investors. Relief remains subject to continuing compliance during the qualifying holding period.

What is EIS & SEIS Tax Relief?

EIS and SEIS are UK government schemes that support investment into early-stage businesses. They help investors reduce their tax bill while giving startups access to funding. SEIS is for very early-stage companies, while EIS is for slightly more established businesses. Both schemes are managed under HMRC rules and offer valuable tax benefits if conditions are met. SEIS is designed for very early-stage startups, while EIS is intended for more developed companies. Investors can benefit from income tax relief of up to 50% under SEIS and up to 30% under EIS. Both schemes also offer capital gains tax advantages, along with loss relief if the investment fails. However, these benefits are only available if the investment meets the required HMRC qualifying rules.

Why SEIS and EIS Relief Fails

An EIS or SEIS investment is meant to reward risk. You put capital into an early-stage company. In return, HMRC offers income tax relief, CGT exemptions, and loss protection. But relief is only secure if the structure holds. We review positions where it did not.

Capital deployed outside qualifying time limits
Share rights breaching EIS/SEIS requirements
Risk-to-capital condition not satisfied
Gross asset or employee thresholds exceeded
Connected party status triggered
Trade activity entering excluded sectors
Incorrect income tax or capital gains tax claims
Disposal within the 3-year holding period
Late or defective compliance statements

HMRC does not warn you before withdrawing relief. They simply review, reject, and recover.

5 Common and Costly Mistakes to Avoid

HMRC relief is withdrawn for non-compliance, not bad intentions. Avoid these common pitfalls:

Don’t claim relief before receiving the EIS3/SEIS3 certificate
Selling shares within 3 years can trigger full relief clawback
Exceeding HMRC size limits at investment can disqualify relief
Being a connected party (director/employee) may remove eligibility
Moving into excluded trades (e.g., property development) can cancel relief

How Legend Fusions Structures EIS & SEIS Engagements

We assess how capital was introduced, how shares were structured, and whether relief conditions were met before HMRC reviews the position. Ownership structure, share class rights, and compliance sequencing determine whether relief is secured or withdrawn.

For Investors

For Founders

For Teams and Advisors

What This Engagement Covers

This engagement reviews how capital is introduced, structured and deployed under SEIS and EIS so relief positions are secured before submission and monitored after issue.

Trade qualification and excluded activity assessment
Risk-to-capital condition review
Advance assurance positioning and documentation review
Share class rights and subscription term confirmation
Capital deployment mapped to qualifying expenditure windows
Compliance statement preparation and submission timing
Income tax relief and capital gains tax deferral review
Post-issue monitoring during the three-year holding period
HMRC enquiry response where relief is challenged

The work focuses on statutory compliance, sequencing accuracy and relief protection under active HMRC interpretation.

What Our Clients Say

Common SEIS & EIS Risk Situations We Handle

We support clients across a wide range of Capital Gains Tax cases, providing clear capital gains tax advice to ensure correct reporting, accurate calculations, and full HMRC compliance. Each case is reviewed carefully to reduce risk and improve tax efficiency.

Advance Assurance Risk

Founder Raise Exposure

Investor Relief Risk

Post-Issue HMRC Challenge

Timeline For Review and Filing

What Happens After You Contact Us

Frequently Asked Questions About Capital Gain Tax

01.What happens if HMRC reject advance assurance?

HMRC refusal delays the raise and weakens investor confidence. Share structure and qualifying status must be corrected before capital proceeds.

02.How do I claim EIS income tax relief on my Self Assessment?

Enter the details from your EIS3 certificate on the “Reliefs” section of your Self Assessment return. We can review your certificate and calculation before filing.

03.What happens to my EIS relief if the company fails?

You may claim loss relief against income or capital gains. The relief depends on when the shares were acquired and your marginal tax rate.

04.Can I carry back SEIS relief to the previous tax year?

Yes, SEIS relief can be carried back to the preceding tax year, effectively offsetting income tax from that year. This must be claimed within the normal filing deadlines.

05.What triggers loss of EIS or SEIS relief?

Relief is lost if qualifying trade conditions fail, risk-to-capital is breached, connected party status arises, or shares are disposed early.

06.Can SEIS and EIS be used together?

Yes. SEIS is typically used first, followed by EIS, subject to funding limits and qualifying conditions.

07.What happens after the compliance statement is submitted?

HMRC review the submission and supporting evidence. Relief remains conditional during the three-year holding period

Review the Position Before Exposure Arises

Relief withdrawal follows structuring error, not intention.

What is EIS & SEIS Tax Relief?

Why SEIS and EIS Relief Fails

5 Common and Costly Mistakes to Avoid

How Legend Fusions Structures EIS & SEIS Engagements

For Investors

For Founders

For Teams and Advisors

Our Process: From Investment to Secured Relief

01

Review

02

Assess

03

Calculate

04

File

05

Monitor

What This Engagement Covers

What Our Clients Say

Related Tax & Advisory Services

Common SEIS & EIS Risk Situations We Handle

Advance Assurance Risk

Founder Raise Exposure

Investor Relief Risk

Post-Issue HMRC Challenge

Related Tax Guide

Timeline For Review and Filing

What Happens After You Contact Us

Frequently Asked Questions About Capital Gain Tax

Review the Position Before Exposure Arises

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