Income Tax Act 2007 section 257CE

The no tax avoidance requirement

Section 257CE requires that shares qualifying for seed enterprise investment scheme (SEIS) relief must be issued for genuine commercial reasons and must not form part of any tax avoidance arrangement.

• Shares must be issued for genuine commercial reasons to qualify for SEIS relief
• The share issue must not be part of any scheme or arrangement aimed at avoiding tax
• Tax avoidance need not be the sole purpose — relief is denied if avoidance is one of the main purposes
• This requirement acts as a safeguard to ensure the SEIS is used to support real business investment rather than to gain a tax advantage