Income Tax Act 2007 section 257SC

Cases where assessment not to be made

Section 257SC sets out the circumstances in which HMRC may not make an assessment to withdraw or reduce Social Investment (SI) tax relief that has already been given.

• No assessment may be made to claw back SI relief because of any event occurring after the investor's death.
• Where the investor has disposed of all their investments in the social enterprise before the end of the three-year holding period, and relief has already been partially recovered on disposal, no further assessment may be made for subsequent events.
• The exception to this protection is where the investor subsequently fails the eligibility conditions relating to not being an employee, partner or paid director, not having an interest in the capital of the social enterprise, or colluding with a non-qualifying investor.
• These rules effectively limit HMRC's ability to claw back SI relief once investments have been fully disposed of, unless the investor breaches the personal eligibility requirements.