ACCA Advanced Taxation (ATX) Practice Exam

What is the time period allowed for claiming Capital Gains Tax EIS or SEIS reinvestment relief after the end of the tax year in which the disposal occurred?

1. 1 year from the date of disposal

2. 3 years from 31 January following the end of the tax year

3. 5 years from 31 January following the end of the tax year

4. 7 years from the end of the tax year

The correct answer is: 5 years from 31 January following the end of the tax year

The correct answer reflects the specific regulations surrounding the claim for Capital Gains Tax relief under the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS). According to these regulations, individuals who have realized a capital gain have the opportunity to claim relief for investments made under EIS or SEIS up to five years after the 31 January following the end of the tax year in which the gain was made. For instance, if a taxpayer has a disposal in the tax year 2022-23, the deadline for applying for relief would extend until 31 January 2028, thereby facilitating a five-year window that allows taxpayers the flexibility to contribute to eligible EIS or SEIS investments while simultaneously claiming relief against capital gains made in the previous period. This time frame is an important aspect of the EIS and SEIS rules, as it provides a generous period for tax planning and reinvestment, effectively encouraging investment in qualifying companies. The other options do not accurately reflect the provisions as stipulated by the legislation, making them non-compliant with the actual relief timelines.