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  • Right... accountants have got back to us.

    The tl;dr is that we will wait a few more months as we currently meet neither criteria.

    Tax Accountant:

    The definition of commencing to trade refers to the open market sale of a product, goods or services. There is a significant body of case law on this particular point and HMRC's own detailed manuals make it clear that until that point they consider the company being in a state of Research and Development in preparation for a Trade.

    I appreciate that the SEIS guidance is actually very poor on this point, but HMRC make it clear that this is just guidance and has no statutory authority. It is relatively common for HMRC's guidance notes to be incorrect and incomplete - and that this fact does not prevent HMRC disallowing claims or issuing assessments (again this is subject to case law up to the Court of Appeal which decided in HMRC's favour) The cynic in me thinks that HMRC's guidance is deliberately poor given how detailed and complicated the legislation actually is.

    Given how valuable the relief is, we expect HMRC to be very strict on when qualifying periods are met, and an early claim could prejudice this.

    So our advice is that the claim should not be submitted until 70% of the monies raised has been spent. On this note HMRC have made the point that if the company has other income arising (as I know you have done) then it considers that this is normally spent first before the money raised through the share issue.


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