Advance assurance

SEIS / EIS Advance Assurance: Don’t forget..

Don’t forget that you need the names and addresses of prospective investors when applying to HMRC for advance assurance that your company is a qualifying company for the purposes of issuing shares under EIS or SEIS.

Many founders are still unaware and can end up wasting valuable time as HMRC will reject the application immediately.

The problem for many entrepreneurs is that it’s a bit of a ‘chicken and egg’ situation – the investors will normally only express interest once the company has secured advance assurance from HMRC that it qualifies…

Per HMRC’s guidance:

If you’re applying for EIS or SEIS and your company:
– is raising money directly from investors: you must provide the name and address of any prospective investors
– is listed on the Alternative Investment Market (AIM) – you do not need to provide investor information
– plans to list on AIM – you must provide the name and registration number of the nominated adviser that supports its listing
– seeks investment through a fund manager or business promoter – you must provide evidence that they’ve agreed to act on your behalf and will continue to work with you
– seeks investment through a crowdfunding platform – you must provide evidence that they’ve accepted your proposal and will continue to work with you

https://www.gov.uk/guidance/venture-capital-schemes-apply-for-advance-assurance

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

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 KitIt 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.

GF012: SEIS / EIS advance assurance tax tips for Film Production companies

In this edition of the Get Funded! podcast we cover some additional tips for film production companies that may be seeking advance assurance from HM Revenue & Customs that they are a qualifying company for the purposes of raising funding under SEIS / EIS.

Further info to enclose for SEIS or EIS film company HMRC advance assurance applications includes:

  • a description of the film company’s role in the production
  • the name of the film
  • how the company secured the production
  • what other parties may be involved e.g. co-producers, SPVs etc.

We hope you find it useful – you can subscribe via iTunes here

GF011 – What is SEIS / EIS HMRC advance assurance and how do I get it?

Get Funded! podcast covering SEIS and EIS

In this episode of the Get Funded! podcast we cover the all important:

HMRC SEIS / EIS advance assurance procedure

This podcast includes the following points with practical advice:

  • Why the advance assurance application is important?
  • How you apply for it?
  • Typical lead times?
  • What could go wrong?
  • Critical info to include?

As discussed in the podcast, the advance assurance procedure is not mandatory although it is highly recommended. This is your opportunity to get HMRC’s approval that your company is a qualifying company for the purposes of raising funding and issuing shares under SEIS / EIS. Most sophisticated investors will insist on evidence of a successful advance assurance application. This is your chance to flush out any uncertainties – don’t miss it! Listen to the podcast via the player below to learn more.

You can find the HMRC SEIS / EIS advance assurance online form mentioned in the podcast here.

Don’t forget that the typical turnaround time is 4-6 weeks for HMRC to respond to your advance assurance application. To avoid unnecessary delays, you would be well advised to get all your shareholder documents (including Articles with any revisions in contemplation of SEIS / EIS investors) finalised prior to filing the application. This is because HMRC will normally want to see the documents in as final form as possible. Otherwise you run the risk that HMRC will issue a ‘partial’ advance assurance in that they will ask for sight of the final version of (say) the Articles if further revisions are envisaged – so you would have to go through the process again. Tune into the podcast via the player below to learn more.

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5 Tips on Applying for SEIS / EIS HMRC Advance Assurance

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.

What is the Seed Enterprise Investment Scheme (SEIS) Advance Assurance?

What is the seed enterprise investment scheme advance assurance video?

I am getting a lot of questions at the moment about the process for raising funding under Seed EIS and where the advance assurance fits in?

The Advance Assurance is a mechanism that allows companies to pre-qualify themselves with HM Revenue & Customs (HMRC) as a qualifying company for the purposes of raising funding under SEIS. It is not obligatory – although it is good practice. Most sophisticated investors will insist that the company has received advance assurance from HMRC of its qualifying status before investing as do many of the crowd-funding sites.

The other factor to take into account in deciding whether or not to seek advance assurance is that when you get to the stage of filing your SEIS compliance statement with HMRC (in order to secure the tax certification for the investors to allow them to claim their SEIS tax relief), if you haven’t already filed an advance assurance, the likelihood is that you will have to answer a series of questions from HMRC regarding the company’s qualifying status much like you would have completed at the time of the advance assurance – so you may as well have gone for it in any case and got yourself on HMRC’s radar as well as gaining comfort for the investors from the outset!

The process for seeking advance assurance is to use HMRC’s own SEIS advance assurance application form. If your facts are particularly complex or you would like assurance in relation to certain aspects then I tend to supplement the form with a letter to ensure that I have disclosed all of the relevant facts – so there is no come-back further down the line…

If you would like any assistance in relation to the Seed EIS advance assurance process then you can drop me a line here or at my specialist advisory firm, ip tax solutions.

 

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