What is the EIS1 Form?
The Enterprise Investment Scheme
The Enterprise Investment Scheme (EIS) is a UK government initiative aimed at promoting investment in early-stage and high-growth companies by offering tax incentives to investors. EIS provides a range of benefits to investors and businesses, including income tax relief, capital gains tax exemption, and loss relief. To benefit from these incentives, investors need to fill out the EIS1 form. This article will discuss the EIS1 form, its purpose, and how to fill it out correctly.
What is the EIS1 Form?
The EIS1 Compliance Statement, officially known as the EIS Compliance Certificate, is a document that must be submitted by a company seeking to raise funds through the EIS. This statement is a crucial aspect of the application process, as it confirms that the company meets the specific qualifying conditions laid out by the UK government. The EIS1 Compliance Statement must be submitted to HM Revenue and Customs (HMRC) as part of the EIS application process.
Thus, the EIS1 form is a document that investors use to claim tax relief on their investments in EIS-qualifying companies. It is a mandatory form that investors must complete and submit to HM Revenue and Customs (HMRC) to claim EIS tax relief. The EIS1 form is a relatively straightforward document, consisting of just three pages. However, it is essential to complete the form correctly to ensure that investors receive the maximum tax relief available.
Purpose of the EIS1 Form
The primary purpose of the EIS1 form is to provide HMRC with the information needed to determine an investor's eligibility for EIS tax relief. The form provides details about the investor's investment, the EIS-qualifying company, and the shares purchased. Investors must fill out the form accurately and provide all relevant information, including their personal details, the amount invested, the date of investment, and the share price paid.
As mentioned above, the primary purpose of the EIS1 Compliance Statement is to ensure that the company seeking EIS relief meets the necessary criteria set by the UK government. This includes, but is not limited to, the following requirements:
The company must be unquoted or listed on a recognized stock exchange, such as the Alternative Investment Market (AIM).
The company must have a permanent establishment in the UK.
The company's activities must fall within the scope of qualifying trades as defined by the EIS legislation.
The company must not have raised more than £5 million through EIS, Seed Enterprise Investment Scheme (SEIS), or Venture Capital Trust (VCT) investments in the previous 12 months.
The company must not have total assets exceeding £15 million before the share issue or £16 million immediately after the share issue.
The company must have fewer than 250 full-time employees or their equivalent at the time of the share issue.
By submitting the EIS1 Compliance Statement, the company demonstrates that it meets these conditions and is eligible to participate in the EIS.
Filling out the EIS1 Form
The EIS1 form consists of three parts:
Part 1: Investor Details
The first part of the form requires investors to provide their personal details, including their name, address, National Insurance number, and the tax year in which they made the investment.
Part 2: Details of the Investment
In part two of the EIS1 form, investors must provide information about their investment, including the amount invested, the date of investment, and the number of shares purchased. Investors must also provide details of the EIS-qualifying company they invested in, including the name, address, and registered number.
Part 3: Declaration and Signature
The final part of the EIS1 form is a declaration that the investor must sign, confirming that they are eligible for EIS tax relief and that the information provided on the form is accurate and complete.
The declaration also confirms that the investor has received the EIS Information Memorandum, which provides information about the investment and the risks involved. The investor must sign and date the declaration, and provide their National Insurance number.
Submitting the EIS1 Form
Once investors have completed the EIS1 form, they must submit it to HMRC along with their tax return for the relevant tax year. Investors can claim EIS tax relief for investments made in the current tax year or the previous tax year. It is important to note that investors cannot claim EIS tax relief until the company they invested in has been issued with a compliance certificate by HMRC. This means that the company has met all the necessary EIS requirements and is eligible for EIS tax relief.
The EIS1 Compliance Statement can be submitted to HM Revenue and Customs (HMRC) online via the government's online portal (which is a better choice), or by post to the following address:
HM Revenue and Customs
EIS Administration
S0920
Newcastle
NE98 1ZZ
If you choose to submit your EIS1 Compliance Statement by post, make sure to send it to the correct address and allow enough time for it to reach HMRC before the deadline.
Before submitting your EIS1 Compliance Statement, make sure that you have completed all the required sections accurately and provided all the necessary supporting documentation, such as copies of the company's memorandum and articles of association, audited accounts, and details of any other investments received.
Once HMRC has received your EIS1 Compliance Statement, they will review it to confirm that your company meets the qualifying conditions for the EIS. If your application is successful, you will receive an EIS Compliance Certificate, which you can provide to potential investors to demonstrate your eligibility for EIS relief.
Submitting the EIS1 Compliance Statement is a critical part of the EIS application process in the UK. By following the guidance provided and ensuring that you've met all the qualifying conditions, you can demonstrate your eligibility for EIS relief and attract investors interested in the tax reliefs offered by the scheme. If you're unsure about any aspect of the application process, seek advice from professional advisors or online resources to ensure that your application is successful.
Where to Get Help with Submitting the EIS1 Compliance Statement
Submitting the EIS1 Compliance Statement can be a complex process, and it's essential to ensure that you've met all the qualifying conditions before you submit your application. If you're unsure about any aspect of the application process, or if you need help preparing your application, you can seek advice from a range of professional advisors, including lawyers, accountants, and EIS specialists.
These professionals, like Pro Tax Accountant, can help you prepare your EIS1 Compliance Statement and supporting documentation, provide advice on the EIS legislation, and guide you through the application process. They can also help you ensure that you comply with ongoing reporting requirements, such as the annual EIS compliance statement.
In addition, there is a range of online resources available to help you understand the EIS legislation and application process. The government's EIS webpage provides detailed guidance on the scheme, including eligibility criteria, how to apply, and ongoing reporting requirements.
Conclusion
The EIS1 form is a vital document that investors must complete to claim tax relief on their investments in EIS-qualifying companies. The form provides HMRC with the information needed to determine an investor's eligibility for EIS tax relief and must be completed accurately and in full.
Investors must ensure that they have received the EIS Information Memorandum before completing the form and that they submit the form along with their tax return for the relevant tax year.