HMRC have updated their guidance in relation to the financial health requirement for SEIS, EIS and VCT purposes and the link to the update guidance is below:

At the same time HMRC have advised that they will consider any explanation provided, and any reasonable adjustments made in respect of the subscribed share capital and the accumulated loss position so long as it is consistent with the UK GAAP and the updated guidance reflects this position.

We are pleased to note that the guidance refers to ‘reasonable adjustments that could be made to the accounts figure reflecting the particular circumstances of the company at the date of the relevant share issue’.

It is also welcome that HMRC will ultimately look at a company’s particular financial circumstances, including the ability to maintain its activity in the short or medium term in assessing whether a company would be regard as in difficulty.

Recently the financial health test has proved an area of technical difficulty for investee companies seeking funding and welcome this update to the guidance from HMRC.

This update was prepared by Philip Hare, Head of EISA’s Tax & Technical Committee.