A start-up which filed the wrong tax form to gain SEIS assurance has lost its legal challenge to have its certification overturned.
Judge Peter Kempster, presiding over the case, warned that it was up to the company to ensure information provided is factually correct, and not the tax office.
Innovate Commissioning Services left investors unable to claim tax relief under the Seed Enterprise Investment Scheme (SEIS) after completing a form for the Enterprise Investment Scheme (EIS).
While similar, SEIS offers high returns for investors at the start of a company’s life cycle. Those who invest in a start-up under the scheme gain a 50 per cent income tax reduction of up to £100,000, as well as Capital Gains Tax (CGT) relief when selling shares in the company.
However, once the EIS form was accidently filed with HM Revenue & Customs (HMRC), the certification of the company could not be changed.
HMRC argued that it had written to the company to clarify its intent, but the company had moved its offices and the letter was not received in time.
The First Tier Tax Tribunal ruled against Innovate Commissioning Services and dismissed the case.
Judge Peter Kempster said “The legislature intended that HMRC should be able to rely upon the accuracy of the compliance statement and the company’s intention, even if it is fraudulent or negligent, does not prevent it from having provided a compliance statement.
“I suppose there must be some limits to this; to take an example put forward by the company, if a compliance statement is submitted to HMRC by a person who did not have authority to make the submission then I suppose it is arguable that the statement was not provided by the company.
“However, that was not the case here and it is clear from earlier cases that the mistaken submission of the wrong form does not prevent there having been provision of a compliance statement.”