What is SEIS and EIS Advance Assurance?

What is SEIS and EIS Advance Assurance?

In order to determine whether or not a company qualifies for the EIS and SEIS schemes, HMRC has an advance assurance process, which essentially tells investors that the company meets all the qualifying conditions based upon the information supplied.

Advance Assurance lets investors know that if they invest their money in the company and it remains qualifying, they will obtain their relevant reliefs. There are a few things you should know about the advance assurance process…

You can apply for SEIS and EIS Advance Assurance at the same time

There are different qualifying conditions for both SEIS and EIS, however, it is possible to combine the application. It is important to still detail the individual elements of each scheme in order to demonstrate how the company qualifies for both SEIS and EIS.

You need to demonstrate investor interest

To avoid speculative advance assurance applications, HMRC requires the name and addresses of  potential investors (three to six is advised), alternatively, a letter of intent from a fund or crowdfunding platform is also qualifying.

You need to explain and detail how the company meets the “Risk to Capital condition”

There are two parts to the Risk to Capital condition, the company must intend to grow and develop over the long term and there must be a significant risk to the investors capital and a higher chance to lose more than they gain.

  • Growth and Development: The company must have the objective to grow and develop in the long-term. Companies need to be able to demonstrate this growth as a result of the investment, typically through its financial projections, market penetration, number of employees, etc.
  • Significant Risk: There must be a considerable risk that investors will lose their share capital (i.e. their investment). A company should be realistic in presenting both the risks and opportunities in their business plan, this includes everything from the genuine commercial risk, to the competitors and the market/industry itself.

You need a copy of the most up to date business plan

A business plan must be submitted with the Advance Assurance application. This is potentially the most time consuming element of the whole advance assurance process. A pitch deck or information memorandum is not a qualifying alternative, however, these also must be submitted if they are intended to be distributed to investors. You need to submit the most up to date business plan, this increases the validity of the advance assurance.

How TBAT can help

We support business in claiming through both the Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS). Please contact us for further information.

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