EIS & SEIS investment
Discussion
There is loads of info on SEIS/EIS if you Google it (a good summary is here: http://blog.granttree.co.uk/post/25916318721/seis-... but essentially whatever you invest you get a chunk back (50% on SEIS up to £100k of investment, 30% on EIS up to £1m investment).
You can claim this back within the first 4 months of share issue as long as the co. has commenced trading. You and the company must remain compliant with the relevant rules and regs of EIS (there are numerous pitfalls) and you can't dispose of the shares (without losing soma/all reliefs if you make any profit) for 3 years.
Disclosure - I worked at, and invested in, an early EIS-compliant co. where I learned the benefits of protected losses and recently MBO'd and exited an SME from which my shareholders all gained tax relief under SEIS. I'm now launching a series of new SEIS/EIS companies that allow investors to use the assets (could be cars but just as easily bikes, boats, collectables) and get the reliefs.
You can claim this back within the first 4 months of share issue as long as the co. has commenced trading. You and the company must remain compliant with the relevant rules and regs of EIS (there are numerous pitfalls) and you can't dispose of the shares (without losing soma/all reliefs if you make any profit) for 3 years.
Disclosure - I worked at, and invested in, an early EIS-compliant co. where I learned the benefits of protected losses and recently MBO'd and exited an SME from which my shareholders all gained tax relief under SEIS. I'm now launching a series of new SEIS/EIS companies that allow investors to use the assets (could be cars but just as easily bikes, boats, collectables) and get the reliefs.
galley skulker said:
Disclosure - I worked at, and invested in, an early EIS-compliant co. where I learned the benefits of protected losses and recently MBO'd and exited an SME from which my shareholders all gained tax relief under SEIS. I'm now launching a series of new SEIS/EIS companies that allow investors to use the assets (could be cars but just as easily bikes, boats, collectables) and get the reliefs.
I know the SEIS rules were recently tightened to close some of the previous loop-holes.I'd be surprised if you could use an SEIS company to buy usable assets as it wouldn't seem to satisfy my understanding of the rules. Plus you couldn't own more than 30% of the shares.
Have you managed to get qualifying SEIS status on the companies you have setup?
johnfm said:
There are quite a few pub/restaurant EIS companies where the company buy and Refurb a pub/restaurant and then carry on the trade. They 'hide' the asset purchase as it isn't the fundamental pet of the trade (selling food and beer is).
That's interesting. I'm pretty sure one of the rules is that you now can't buy a business which is already going concern and convert it to SEIS, so I can see why you might want to refurb something to get around this restriction. I guess you could also buy a company in liquidation? EddieSteadyGo said:
I know the SEIS rules were recently tightened to close some of the previous loop-holes.
I'd be surprised if you could use an SEIS company to buy usable assets as it wouldn't seem to satisfy my understanding of the rules. Plus you couldn't own more than 30% of the shares.
Have you managed to get qualifying SEIS status on the companies you have setup?
I think you are referring to what HMRC call advanced assurance; yes, I have it in writing for both SEIS and EIS reliefs. I'd be surprised if you could use an SEIS company to buy usable assets as it wouldn't seem to satisfy my understanding of the rules. Plus you couldn't own more than 30% of the shares.
Have you managed to get qualifying SEIS status on the companies you have setup?
There is a catch-all element within the regs referring to shareholders receiving benefits in return for investing. My business model and the corporate framework in which it sits ensure use of the assets is allowable (up to a certain point) after which it is limited only to a shareholder's preference regarding possible clawback of a percentage of reliefs received. That's the worst outcome but as he/she is already 50% "up" on the purchase (plus reclaiming 50% of certain costs like insurance) - there's a lot of margin extant and steps to ensure shareholders and he co. remains compliant.
The restriction to 30% ownership is also addressed.
EddieSteadyGo said:
johnfm said:
There are quite a few pub/restaurant EIS companies where the company buy and Refurb a pub/restaurant and then carry on the trade. They 'hide' the asset purchase as it isn't the fundamental pet of the trade (selling food and beer is).
That's interesting. I'm pretty sure one of the rules is that you now can't buy a business which is already going concern and convert it to SEIS, so I can see why you might want to refurb something to get around this restriction. I guess you could also buy a company in liquidation? galley skulker said:
I think you are referring to what HMRC call advanced assurance; yes, I have it in writing for both SEIS and EIS reliefs.
There is a catch-all element within the regs referring to shareholders receiving benefits in return for investing. My business model and the corporate framework in which it sits ensure use of the assets is allowable (up to a certain point) after which it is limited only to a shareholder's preference regarding possible clawback of a percentage of reliefs received. That's the worst outcome but as he/she is already 50% "up" on the purchase (plus reclaiming 50% of certain costs like insurance) - there's a lot of margin extant and steps to ensure shareholders and he co. remains compliant.
The restriction to 30% ownership is also addressed.
I'd be cautious about thinking you've 'addressed the 30% beneficial ownership' restriction. I expect you can plot your way around shareholders' benefiting from the assets, but 30% beneficial ownership is a red line for HMRC.There is a catch-all element within the regs referring to shareholders receiving benefits in return for investing. My business model and the corporate framework in which it sits ensure use of the assets is allowable (up to a certain point) after which it is limited only to a shareholder's preference regarding possible clawback of a percentage of reliefs received. That's the worst outcome but as he/she is already 50% "up" on the purchase (plus reclaiming 50% of certain costs like insurance) - there's a lot of margin extant and steps to ensure shareholders and he co. remains compliant.
The restriction to 30% ownership is also addressed.
Having said that - how much resource do they have to chase up every EIS and SEIS company?
In any event - good luck with it.
Gassing Station | Business | Top of Page | What's New | My Stuff