Raising an EIS investment round after a SEIS round

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    I am looking to raise approximately £400,000 for my startup. I am aware that the more generous SEIS tax reliefs apply to the first £150,000 raised by a company. Can I raise the £400,000 at the same time and qualify for both the SEIS and EIS tax reliefs for my investors, or is there a time gap that applies whereby I have to first receive £150,000 and issue shares pursuant to the SEIS tax relief before then carrying out a second round to receive the balance of £250,000 and issue further shares that will qualify for the EIS tax relief?

    Jonathan Lea

    Pursuant to the Finance (No. 2) Act 2015, which was given Royal Assent on 18th November 2015, the requirement that 70% of SEIS money has to be spent before EIS shares can be issued has now been removed.

    However there will still need to be a time gap, even if just a day, between the company receiving the SEIS money (up to £150,000) and issuing the SEIS shares and then receiving the EIS money and issuing the further EIS shares (in this case for the balance of £250,000). The time gap will still be requried even if you use an escrow account like a law firm’s client account to receive the monies on behalf of the investee company (HMRC consider that the round will have completed and the company holding the money even if it is still in such client or escrow account). The reason for this is so the company can pass the ‘gross assets test’ whereby the SEIS rules state that the company must have gross assets of no more than £200,000 immediately before the SEIS share issue.



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