Income Tax Act 2007 section 257DE

The financial health requirement

Section 257DE requires that a company issuing shares under the SEIS must not be "in difficulty" at the beginning of period B, as defined by reference to EU state aid guidelines.

• The issuing company must satisfy the financial health requirement at the start of period B.
• The financial health requirement means the company must not be "in difficulty" at that point.
• A company is "in difficulty" if it would reasonably be regarded as a firm in difficulty under the EU Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02), as those guidelines had effect in the UK immediately before IP completion day.
• This requirement ensures that SEIS tax relief is only available where the issuing company is financially viable and not in a distressed state.