- After closing a SEIS or EIS round, companies must submit Form SEIS1 or EIS1 to HMRC before investors can claim any tax relief.
- HMRC issues a compliance reference number once the round is approved, which the company uses to generate SEIS3 or EIS3 certificates for each investor.
- Funds raised must be spent on qualifying business activities within three years of the share issue date, or HMRC can claw back tax relief already claimed.
Post-investment SEIS and EIS compliance begins the moment your funding round closes. Companies must submit Form SEIS1 or EIS1 to HMRC, obtain a compliance reference number, and issue SEIS3 or EIS3 certificates before investors can claim a penny of tax relief. The process has strict deadlines, qualifying conditions on how funds are spent, and record-keeping obligations that run for years. Getting it wrong puts investor reliefs at risk and can trigger HMRC clawbacks.
Sleek’s SEIS and EIS service supports founders from advance assurance through to post-investment compliance and reporting.
What happens immediately after your SEIS or EIS round closes?
The compliance process has several stages that must be completed in the correct order. Shares are issued first, the compliance form is submitted to HMRC second, and certificates reach investors only once HMRC has approved the round. Skipping or reversing any step means investors cannot claim relief.
Here is the full post-closing sequence:
- Issue shares to investors and provide signed share certificates.
- Submit Form SEIS1 or EIS1 to HMRC to compliance certify the round.
- Wait for HMRC to review the submission and issue a compliance reference number.
- Use the compliance reference number to complete SEIS3 or EIS3 investor certificates.
- Send certificates to each investor so they can claim income tax relief through Self Assessment.
HMRC does not communicate directly with your investors during this process. The company is the responsible party at every stage.
How do you submit the SEIS1 or EIS1 compliance form to HMRC?
The SEIS1 and EIS1 compliance forms are submitted online through HMRC’s Venture Capital Schemes service. You can only submit once at least 70% of the money raised has been spent on qualifying business activities. Submitting before this threshold is met is a common reason for HMRC to reject or delay a compliance application.
HMRC’s SEIS compliance guidance on GOV.UK sets out the full requirements and the supporting information you will need.
The form typically asks for:
- The date shares were issued.
- The total amount raised under the scheme.
- Confirmation that funds are being used for qualifying activities.
- Details of the company’s trade, structure, and ownership.
HMRC’s processing time varies but is typically four to six weeks. There is no fixed statutory deadline for submitting SEIS1 or EIS1, but the form must reach HMRC before your investors file their Self Assessment tax returns if they want to claim relief for that tax year.
What is the SEIS3 or EIS3 certificate and when do investors receive it?
The SEIS3 and EIS3 certificates are the documents investors use to claim income tax relief through their Self Assessment return. HMRC does not issue these directly to investors. Once HMRC approves the compliance application and issues a reference number, the company completes the certificates and distributes them to each investor individually.
Each certificate must confirm:
- The investor’s full name and address.
- The number of shares subscribed for and the amount paid.
- The date shares were issued.
- The scheme under which relief is being claimed (SEIS or EIS).
- The HMRC compliance reference number.
Investors cannot claim relief without a valid certificate. Sleek’s guide to claiming EIS tax relief explains the process from the investor’s side in full.
If your round was structured to use both SEIS and EIS, SEIS must always be certified and exhausted first. Certifying EIS before SEIS compliance is complete can invalidate the EIS round entirely.
What are the key SEIS and EIS compliance deadlines?
SEIS and EIS compliance does not follow a single fixed date. Different obligations fall at different points across the life of the investment, and founders often underestimate how far into the future the timeline extends.
Obligation | Deadline |
Spend 70% of funds on qualifying activities | Before submitting SEIS1 or EIS1 |
Submit Form SEIS1 or EIS1 to HMRC | Before investors file their Self Assessment return |
Spend all remaining funds on qualifying activities | Within 3 years of the share issue date |
Investor holds shares | Minimum 3 years to retain income tax relief |
Company remains qualifying | Throughout the investor’s full 3-year holding period |
Notify HMRC of any disqualifying event | Promptly, as soon as the event occurs |
The three-year spending window and three-year holding requirement are not the same clock. Both run from the share issue date, but they measure different obligations and any failure on either front can trigger clawback.
Sleek’s SEIS and EIS benefits guide explains how the income tax, CGT, and loss relief advantages interact across this timeline.
How must SEIS and EIS funds be used?
Funds raised under SEIS and EIS must be deployed for qualifying business activities. This is one of the most scrutinised areas of the scheme, and misuse of funds is one of the most common triggers for HMRC to withdraw relief.
Qualifying uses include:
- Product development and research into the company’s core trade.
- Hiring employees to grow the business’s qualifying operations.
- Sales, marketing, and customer acquisition activities.
- General working capital used in carrying on the qualifying trade.
Funds cannot be used for:
- Acquiring another company or its shares or assets.
- Repaying shareholder loans or director loans.
- Purchasing investment property or other non-qualifying assets.
- Paying dividends or making other distributions to shareholders.
- Activities connected with a non-qualifying trade.
Sleek’s guide to raising money through SEIS covers which business activities qualify and how to structure fund deployment to stay within the rules from the start.
What records does your company need to keep after a SEIS or EIS round?
Post-investment record-keeping is a continuing obligation throughout the investor’s three-year holding period, and HMRC can request evidence of compliance at any time. Companies that cannot produce adequate records find it significantly harder to defend a challenged relief.
You should retain:
- Copies of Form SEIS1 and EIS1 as submitted, plus HMRC’s approval response.
- Copies of all SEIS3 and EIS3 certificates issued to investors, with confirmation of delivery.
- A detailed breakdown of how funds were spent, including dates, amounts, and the qualifying activities each payment relates to.
- Evidence that the company continued to carry on a qualifying trade throughout the holding period.
- Records of any changes to the share structure, directorship, or principal trading activity.
- Payroll records for any employees hired using scheme proceeds.
Good records protect both the company and its investors. For sector-specific record-keeping requirements, Sleek’s guide to SEIS and EIS claims for TV and creative companies illustrates how granular the documentation trail often needs to be in practice.
What happens if SEIS or EIS compliance rules are broken?
HMRC can withdraw tax relief and issue clawback notices if the company or its investors fail to meet the qualifying conditions at any point during the three-year holding period. This can happen years after the investment was made and the original relief was claimed.
The most common triggers for clawback are:
- The company ceases to carry on a qualifying trade.
- Shares are sold, gifted, or transferred within three years of issue.
- The company is acquired or substantially changes its principal activity.
- Funds are used for a non-qualifying purpose.
- The investor receives value from the company in a form outside normal qualifying dividends.
- The company loses its qualifying status under HMRC’s rules.
When relief is clawed back, the investor becomes liable to repay the income tax relief originally claimed. The company must also notify HMRC promptly when any disqualifying event occurs. Failure to notify can result in interest and penalties on top of the withdrawn relief.
For investors with deferred CGT gains tied to an EIS investment, the CGT consequences of a disqualification are separate and can compound the financial impact significantly. Sleek’s guide to EIS CGT deferral relief explains how deferral relief is affected when an investment is disqualified or a clawback notice is issued.
How Sleek helps with SEIS and EIS compliance after funding
Managing SEIS and EIS compliance after a funding round means tracking multiple overlapping deadlines, submitting forms to HMRC at the right time, issuing certificates correctly, and keeping detailed records for years. Miss a step and investors lose reliefs they were counting on.
Sleek works with early-stage companies to handle every part of the post-investment compliance process accurately and on time. Whether you have just closed your first SEIS round or are moving into EIS for a follow-on raise, Sleek takes the compliance administration off your plate so you can focus on building the business.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
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FAQs on SEIS and EIS compliance after funding
Can SEIS and EIS be raised in the same funding round?
Yes, but the order is fixed. SEIS eligibility must be fully exhausted before any EIS shares are issued, which in practice means running two separate share issuances. The SEIS1 compliance application does not need to be approved before EIS shares are issued, but SEIS must come first. Running both schemes in the wrong order can disqualify the EIS round entirely and cannot be corrected retrospectively.
What happens if HMRC rejects the SEIS1 or EIS1 compliance application?
HMRC will write to the company explaining why the application has been rejected and what is missing or incorrect. In many cases, the application can be resubmitted once the issue is resolved. Common rejection reasons include insufficient evidence that 70% of funds have been spent on qualifying activities, or discrepancies with the company’s original advance assurance. Investors cannot receive certificates until a compliant application is approved.
How long does an investor have to claim SEIS or EIS relief on their Self Assessment return?
Investors have four years from the end of the tax year in which the shares were issued to claim SEIS or EIS income tax relief through Self Assessment. For shares issued in the 2024 to 2025 tax year, the deadline falls on 5 April 2029. The clock runs from the share issue date, not from the date the SEIS3 or EIS3 certificate was received.
Can a company director or employee invest under SEIS or EIS?
It depends on the scheme. Under SEIS, directors can invest and claim relief provided they are not connected to the company in a disqualifying way. Under EIS, the rules are stricter: paid employees are generally disqualified from claiming relief. Unpaid directors may qualify in some circumstances. The connected persons rules are complex, and taking specialist advice before issuing shares to anyone with a role in the company is strongly recommended.
What is a Knowledge Intensive Company and how does it change EIS compliance?
A Knowledge Intensive Company (KIC) is one that carries out substantial research, development, or innovation activity meeting specific HMRC criteria. KIC status raises the EIS lifetime fundraising limit from £12 million to £20 million, and increases the annual investor limit to £2 million for qualifying investments. KIC status must be demonstrated at the point of share issue and supported by documented evidence of the qualifying R&D or innovation activity.
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Can SEIS3 or EIS3 certificates be reissued if an investor loses them?
Yes. If an investor loses their SEIS3 or EIS3 certificate, the company can issue a duplicate. The replacement must contain identical information to the original and should be clearly marked as a duplicate. HMRC does not reissue certificates directly. The company should keep a record of any duplicates issued, including the date of reissuance and the reason, in case it is referenced during a future HMRC compliance enquiry.
How much can a company raise under SEIS or EIS in total?
Under SEIS, the lifetime fundraising limit is £250,000. Under EIS, the limit is £12 million over the company’s lifetime, rising to £20 million for Knowledge Intensive Companies. These caps apply across all rounds, not per individual investor. A company that reaches the SEIS limit can proceed to EIS, but once either cap is reached, no further qualifying investment can be raised under that scheme. Sleek’s SEIS tax relief guide covers the full eligibility conditions.
