What is SEIS and/or EIS advance assurance?

If a start-up or early-stage company seeks to fundraise over the next year, they should seriously consider seeking SEIS and/or EIS advance assurance. In case you’re not aware, SEIS and EIS are advantageous tax relief schemes established by the UK government to encourage UK investors to invest in these high-risk early-stage companies. 

Advance assurance is basically a pre-approval process conducted by HMRC before any investment is made into the company or shares are issued. Advance assurance offers investors a level of comfort that they will potentially receive the schemes tax reliefs should they invest in the company. 

Advance assurance involves a company putting together an application providing HMRC with a business plan, financial projections, incorporation documents, and demonstrating how the company meets the qualifying conditions. Once a company is granted advance assurance from HMRC, they can begin fundraising and let potential investors know they could avail of the tax reliefs should they invest in the company.

Why should a company apply for advance assurance now?

• Summertime is one of the quietest times of the year for HMRC. It is consequently, the perfect time to put together and submit an advance assurance application. The closer we get to the end of the tax, the busier it gets for HMRC, and with nine months to spare now is the ideal time.
• Investors will be looking for SEIS and EIS companies to invest in before the end of the tax year. Therefore if the company gets their advance assurance now, there will be no having to wait or stress about potential delays regarding advance assurance in order to get the investment before the end of the tax year. 
• For non-UK companies, the application process takes several months. The non-UK companies need to meet the permanent establishment first and apply for a Unique Tax Reference (UTR) from HMRC, before an advance assurance application can be submitted. There are no speedy applications for non-UK companies; the process can take at least two to three months minimum, assuming there are no issues or delays.  
  
  

Although a company needs advance assurance to attract investors, the company will need to demonstrate to HMRC that there is interest from investors. HMRC will not accept a speculative application; hence, a company will need to provide either a list of potential investors (name, address, and potential investment) or a letter of engagement or intent from a fund or crowdfunding platform. 

The Seed Enterprise Investment Scheme and Enterprise Investment Scheme are two of the best-kept secrets in the UK entrepreneur industry. Every entrepreneur seeking equity investment should find out whether their company qualifies for the schemes. If, as an entrepreneur, you think your company qualifies for both or one of the schemes, I strongly recommend seeking advance assurance as this can make your company more attractive to potential investors and investment funds.