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Step 5: Ongoing compliance

After issuing SEIS3 certificates, ensuring ongoing compliance with SEIS/EIS requirements is important to maintain your company’s eligibility and safeguard your investors' tax relief. Here’s a step-by-step guide to managing ongoing compliance:

Why ongoing compliance is important

Ongoing compliance ensures that your company continues to meet the criteria set by HMRC, which is essential for maintaining the tax benefits for your investors and avoiding any penalties or issues with HMRC.

Steps for ongoing compliance

  1. Monitor use of funds: Ensure that the funds raised through SEIS/EIS are used for the purposes stated in your application, such as business activities, preparation for new business, or R&D.
  2. Maintain accurate records: Keep detailed and accurate records of all business activities, financial transactions, and use of SEIS/EIS funds. Thoroughly document expenditures, employee numbers, and other key business metrics.
  3. Adhere to trading requirements: Continue to meet the trading requirements outlined by HMRC. This includes engaging in qualifying trade and not participating in excluded activities. Ensure that your company’s activities align with the business plan and use of funds approved by HMRC.
  4. Regularly review compliance: Periodically review your company’s compliance with SEIS/EIS requirements. This can include internal audits or consulting with financial advisors to ensure all criteria are continuously met. Update your business plan and forecasts as necessary to reflect any changes in your business activities or market conditions.
  5. Prepare for HMRC reviews: Prepare for potential HMRC reviews or audits by maintaining organised and accessible records. Respond promptly to any HMRC inquiries or requests for additional information.

Tips for Ensuring Ongoing Compliance

  • Be proactive: Regularly check compliance to avoid any surprises or last-minute issues.
  • Seek professional advice: Consult with accountants or legal advisors specialising in SEIS/EIS to ensure your company remains compliant.
  • Communicate with investors: Keep your investors informed about your compliance status and any significant changes that may affect their investment.

By following these steps, you can ensure ongoing compliance with SEIS/EIS requirements, protect your company and your investors' tax benefits, and generally create a transparent relationship between your startup, your investors, and HMRC.

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