Seed EIS

Curve smashes crowdfunding target on CrowdCube

Posted on September 10, 2019 by Seed EIS 0

Amazing result from the guys at Curve in raising their target £1m fund-raise in FOUR MINUTES (!) and hitting £6m within five hours…

Seriously!?! A truly phenomenal result for the team there and, to be fair, it’s a great product (as I’ve already got a card myself and love it!).

Anyhow, most startups are not going to see these sorts of results and we shouldn’t lose sight of how far along these guys were already in their growth plans. See the video for more.

Using SEIS / EIS to boost funding

For most UK startup founders, they shouldn’t lose sight of the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) to help attract and boost funding.

These are attractive tax incentives that benefit the investors directly (in income tax and capital gains tax reliefs) and you as the founder indirectly (as the investors should be more willing to invest in your company).

Unfortunately, the rules around SEIS/EIS can be complex so please reach out for help.

Read more from Curve:
https://discover.curve.app/a/fintech-curve-smashes-crowdfunding-target

Link to Crowdcube fundraising page:
https://www.crowdcube.com/companies/curve/pitches/Z1n3gb

How to Incorporate a UK company AND file for corporation tax and employee taxes (PAYE) all in one go

Posted on January 11, 2019 by Seed EIS 0
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Here’s a neat little tip for the formation of a UK company whilst filing with HMRC for company corporation tax and Pay as You Earn (PAYE) for you and your (future) employees all in one go.

This all-in-one registration service is offered by the UK Government online portal. All for the grand old price of just £12 at the time of recording. And yes, your company can be up and running within 24 hours. That’s tough to beat!

This is a service offered Gov.uk and it’s a service that not a lot of people seem to know about – especially judging by the low uptake per this press release dated 4 Jan 2019.

This quick and easy approach might not suit everyone. If you are unsure or especially if you have a complex case such as seeking funding e.g. via the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS), then you may wish to seek advice from a qualified accountant or lawyer.

You can access the Streamlined Company Registration Service via this link: https://www.gov.uk/limited-company-fo…

Launching our new course on the HMRC SEIS / EIS advance assurance

Posted on January 13, 2017 by Seed EIS 0

Delighted to have launched our new online step by step guide to preparing and filing an Advance Assurance Application to HMRC that your company qualifies under SEIS and / or EIS!

Really brought about by popular demand and to fill a gap where some companies simply don’t have the budget to take on a professional firm to carry out the preparation work and specific advice on advance assurance applications (although I am afraid this can never be a substitute for this).

The course has been called: The SEIS / EIS Advance Assurance DIY Kit. It is really aimed at founders / entrepreneurs to give them a bit of a helping hand. The hope is that for 90% of applications, this might be enough and will therefore result in huge cost and time-savings all round.

As well as a 40 min run through the form and how to complete it, we’ve also chucked in a template of a letter that we use to supplement the standard (limited!) EIS/SEISAA Form. You can use this for your application too.

Some links to further resources rounds off what is hopefully a useful addition to the startup community.

You can access this new online tutorial course on completing your SEIS / EIS advance assurance form here.

SEIS / EIS – A simple issue, yet often not easy…

Posted on May 11, 2016 by Seed EIS 0

It might be useful to revisit one crucial factor in planning for SEIS / EIS:

The issue of new ordinary shares in exchange for a cash investment.

Simple, right?

Then day-to-day reality steps in….

The shares are issued before the cash has cleared – oops!

The shares are issued way after the cash has cleared – oops!

HMRC could contend that in the first case the cash could never have been for the shares as they were issued before the cash cleared (two unrelated transactions, in their eyes) and in the latter case that it was a loan conversion – neither qualify.

What’s the solution?

Arrange so that the shares are issued on the same day as the cash clears in the company bank account. There can then be little argument over what the cash was for.

Simple; rarely easy!

This post is a sample from our SEIS / EIS training course that you can access by subscribing below:

Raising SEIS / EIS funding for a software company? Watch out!

Posted on September 11, 2014 by Accessing Funding Seed EIS 1

969088410_0597019e20_mImagine you are setting up a software development company. Perhaps you plan on generating revenues using a Software as a Service (‘SaaS’) business model: charging users a licence fee to access the service via the cloud.

You need funding and are considering the benefits of Seed Enterprise Investment Scheme (SEIS) or Enterprise Investment Scheme (EIS) to help attract funding for your tech startup. It is always good practice to seek advance approval from HM Revenue & Customs that your company is a qualifying company for the purposes of raising money under either or both of these UK Government tax incentives.

One of the key points to consider as part of this advance planning process is whether your company will be carrying out a qualifying trade for the purposes of these tax reliefs? This is not always so obvious – software companies being a case in point.

Note that the trade of ‘receiving licence or royalty fee’ income is of itself an excluded activity i.e. does not qualify, under either scheme. However, there is an exemption from this restriction where the company creates the whole, or greater part, of the underlying intellectual property that goes on to generate the licence or royalty income. Cue – breathe a huge sigh of relief!

Matters are not so straightforward, however, in situations where intellectual property is acquired from another company and that transferor company has already monetised the IP and received licence fee income in relation to it. At what stage will you have created the whole (doubtful) or greater part of the underlying IP and so qualify for SEIS / EIS?

* I should clarify that the above considerations are not exclusive to software companies – it is simply the most common scenario that I have encountered in practice.

5 Tips on Applying for SEIS / EIS HMRC Advance Assurance

Posted on June 20, 2014 by Seed EIS 0

Having prepared and filed too many to mention (!), here are a 5 tips on applying for SEIS / EIS HMRC advance assurance:

1. Don’t leave it too late! HM Revenue & Customs (HMRC) are generally pretty good in turning around applications within 30 days but it can peak to 6 weeks around key tax deadlines e.g. 31 Jan self assessment tax return filing date and 5 April end of personal tax year.

2. Use the form that HMRC provide for you but you may wish to accompany the form with a covering letter, as there’s not much room to disclose any additional matters that might be relevant. Don’t forget, this is a tax clearance document and therefore, HMRC will reserve the right to withdraw an approval if it later transpires that you didn’t disclose all of the facts. You have been warned!

3. The advance assurance application process is not mandatory but is well advised for two principal reasons: i) most investors will insist on evidence of HMRC approval for their own peace of mind before parting with their investment cheque [update: it is now a requirement that you include the names and addresses of prospective investors in your application]. ii) it gets you onto HMRC’s radar for the second stage which is to complete and file forms SEIS1 / EIS1 which is necessary for the investors to be able to claim the tax relief. If you haven’t applied for advance assurance, HMRC generally ask all of the sorts of questions that would have been covered in the advance assurance application in any case.

4. If you foresee that you will be seeking to raise both EIS cash after a SEIS round then apply for both within a single advance assurance application. [Update: the most recent version of the HMRC form now more easily allows for the two boxes to be ticked}

5. Take care if you are a software company and will be generating revenues from licence fee income (as most will). You will be relying on a carve-out from an otherwise non-qualifying ‘excluded activity’ – in receiving royalty or licence fee income – which states that you can qualify as a SEIS / EIS company only if the whole, or greater part, of the underlying intellectual property that generates the revenues is created by your company.

I hope you find these tips useful. If you need more, you could subscribe for this free SEIS/EIS course (below) and/or you could reach out for specialist assistance here.

Can I raise funding under both the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS)?

Posted on January 16, 2014 by Seed EIS 1

The quick answer is YES – you can raise funding under both SEIS and EIS but there are some important points to watch including:

  1. If you wish to raise cash under both schemes, you must issue shares under SEIS before EIS. You can’t raise money and issue shares under EIS and then seek to raise money and issue under shares under SEIS after. It kinda makes sense but one to watch…
  2. You can only follow on with an issue of shares to investors under EIS once you’ve spent at least 70% of the SEIS cash (no sniggering at the back!). This can raise some practical difficulties as the SEIS investment limit for the company is capped at £150,000 so you don’t want to be back out on the investment trail too soon. It is possible to raise the SEIS and EIS money jointly but to take great care in the issue, timing and other matters related to the shares and investors. *******
  3. There are some other ‘funnies’ around timing of appointment to Director etc which can differ between the schemes among other things so you need to take care as you don’t want to jeopardise the EIS relief further down the line.

Drop me a line if you need any help either via the contact page or on Twitter (@stevelivingston) or via my specialist tax advisory firm, ip tax solutions.

******* Note that this 70% rule has been abolished for share issues post 5 April 2015

 

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