Funding

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

7 R&D Tax Credit Tips

  1. Don’t assume your company doesn’t qualify – even if your accountant has discounted it or perhaps not even mentioned it (in fact that might be all the more reason to check it out!)
  2. It doesn’t matter whether your company is profitable / tax paying in a financial period or loss-making – R&D tax relief can benefit you and release cash into your business in both cases
  3. Think about R&D tax relief and how it might apply to your company as early as possible. This way you can ensure that you are capturing relevant supporting information, documents and costs as you go along – rather than trying to cast your mind back and rebuild retrospectively which might lead to sub-optimal claims
  4. Don’t discount R&D tax relief if you carried out eligible activities a couple of years back thinking you’ve missed out – you can make a retrospective claim for accounting periods ending in the past two years. So at the time of writing this post (20 June 2016), say you have a 30 June financial year end then the periods ended 30 June 2014 and 30 June 2015 are still open and eligible for R&D tax credit claims.
  5.  Don’t wrestle with the definition of what activities qualify for R&D tax relief on your own – many companies wrongly count themselves out when a quick chat with a R&D tax specialist might have helped them understand how they do qualify. Many company owners are stunned at the breadth of the R&D tax relief.
  6. Don’t think you have to leave your current accountant to access specialist R&D tax advice – most R&D specialists will supplement the good work your accountant is already doing for you with their specialist R&D tax services so this needn’t upset your ongoing accountancy support relationship.
  7. Think about how the UK R&D tax incentive can fit into your overall funding profile – so tax advantaged funding such as SEIS / EIS can typically be used in harmony with the R&D tax incentive. Watch out for grants as these can impact adversely on the levels of tax relief available under the R&D tax incentive. Cash tax breaks such as the Patent Box can be used alongside the R&D tax relief. As you can see, thinking about how this can all fit together sooner rather than later will help optimise available funding.

SEIS / EIS is on the rise!

Judging by the rapid uptake in the number of calls and enquiries we are receiving on a weekly basis from entrepreneurs and founders looking to ensure that their company is SEIS / EIS tax ready – I think it is fair to say that SEIS / EIS tax benefits are now getting the attention they deserve!

So if you are a star company looking for rapid growth and you’re in search of investment, then you really need to get up to speed with the tax benefits that SEIS / EIS government tax incentives can potentially bring you.

I’m afraid to say that it can be quite complex in parts – good news is that we’ve set up an email course to help you swot up!

You can access it here:

FGB004 – Jonathan Lea on legal issues to consider in closing a funding round

Fast Growth Businesss

Jonathan Lea of the Jonathan Lea Network joins me this week to discuss legal issues to consider when seeking to close an early stage funding round.

Legal issues to consider when closing a fundraising round

In this podcast we cover:

  • What documents most investors will typically expect startup founders to have in place – from investors’ agreement to Articles + shareholders agreement etc
  • Managing the process of investors committing and exchanging documents at different times
  • Potential pitfalls to watch out for if you are seeking to issue shares under SEIS / EIS
  • How to structure a joint SEIS / EIS funding round

You can read more that Jonathan drafted on this subject here in this post.

Resource of the Week

This weeks’ resource of the week comes courtesy of Jonathan himself – it is Cloud Employee.

Your chance to access overseas software development support sourced on your behalf by a UK company at a fraction of the normal cost – with rates as low as £8 ph.

Head over to cloudemployee.co.uk for more…

Get interactive!

Please leave any comments or feedback via Twitter – @iptaxsolutions or use the #fgbpodcast

Subscribe to the Fast Growth Business podcast

You can subscribe to the Fast Growth Business to access future and past shows at iTunes.

Please leave us a rating :)

FGB003: Richard Harrison, Inovaris talks SME grants | Horizon2020 | Business Growth Service demise

Fast Growth BusinesssIn this third edition of the Fast Growth Business podcast, Richard Harrison, Director of innovation consultants, Inovaris, provides founders and entrepreneurs with some tips on navigating the world of grants and also gives us his thoughts on recent cut-backs to business support services such as the Business Growth Service.

Before we dive into the interview, our resource of the week is ScheduleOnce – you know those times when you’re trying to find a mutually convenient time for a meeting or call and you find yourself making suggestions and nothing quite fits in….! Well with ScheduleOnce you can email a link that provides live access to your calendar in that it suggests slots that it knows you are free. I’ve been tinkering with this for a few weeks and early signs are good. Give it a try!

Please get interactive with us on Twitter and leave your feedback in iTunes.

Diving into the interview with Richard Harrison we discuss the following:

  • Horizon 2020 – challenges involved and which organisations it typically suits
  • Typical time-frames for grant applications
  • Alternatives to Horizon2020 – that might be preferable for many SMEs
  • Certain grants that can allow salary costs as the ‘matched funding’
  • Problems in navigating available grant funding (without expert help)
  • Closure of the Business Growth Service – impact on Growth Accelerator, Manufacturing Advisory Service etc

You can find Richard at Inovaris or on Linkedin.

Please subscribe for past and future episodes at iTunes.

We hope you enjoy it!

FGB002: Modwenna Rees-Mogg talks raising funding |Crowdfunding | CrowdRating

Fast Growth BusinessWe are delighted to bring you this second episode of the Fast Growth Business podcastthis week we are pleased to welcome as our guest, Modwenna Rees-Mogg, founder of leading private investor news service, Angel News, amongst other entrepreneurial ventures including a new venture aimed at entrepreneurs called CrowdRating.

This podcast is brought to you by ip tax solutions | the innovation tax specialists.

Useful Resource of the Week

Our resource of the week is Rapportive – a useful Gmail extension that brings your social media connections, such as Linkedin, directly into your inbox. It is a good way of keeping in touch with existing contacts and for reaching out to potential new connections…

Guest: Modwenna Rees-Mogg: Angel News | CrowdRating

In this conversation, we cover how Modwenna made the transition from corporate financier to entrepreneur and founded Angel News which brings thought-leadership and insights into the field of private company investment – aimed at both investors and entrepreneurs.

She penned a book on crowdfunding: Crowd Funding: How to Raise Money and Make Money in the Crowd – at a time that was arguably ahead of the curve (much of her forecasts fortunately came true!) – and has she since co-launched a new venture called CrowdRating – the ratings agency for equity crowd funding. This new venture will be of particular interest to founders and entrepreneurs who might be considering raising funding via crowd funding platforms such as Crowdcube.

Modwenna shares her thoughts and views on the private company investing landscape (including SEIS & EIS) plus her view that most founders’ investors might be closer than they think….

You can listen below or access via iTunes.

Seeking your input

Please get in touch with your questions and feedback via Twitter: @iptaxsolutions and/or #fgbpodcast

If you are a UK entrepreneur and would like to share your story, please get in touch as above. Also, if you are involved in advising entrepreneurs on building scalable businesses, we would be delighted to hear from you and to get you involved if you’re the right fit.

Subscribe to receive future episodes

You can subscribe via iTunes or find us on the BusinessN2K.com network.

Listen to this week’s podcast 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.

Please subscribe at iTunes to ensure that you can pick up past and future episodes. Also, we’d be thrilled if you could leave a review on iTunes.

If you enjoyed this post, get weekly email updates (they’re free)


GF008 – Does your company qualify for SEIS / EIS?

Get Funded! podcast covering SEIS and EIS

Here in this edition of the Get Funded! podcast we cover the essential requirements related to your company and its eligibility for SEIS / EIS funding.

As you might expect for such a generous tax relief, it is not available to all companies – instead it is targeted at small – medium sized companies with the capacity for growth (along with a healthy dose of risk!).

The key company requirements for SEIS / EIS are as follows:

        • The company must be unquoted i.e. it must not be quoted on a recognised stock exchange. Note that the Alternative Investment Market (AIM) is okay for SEIS / EIS purposes as it is not counted by HMRC as a ‘recognised stock exchange’
        • The company must have a UK permanent establishment. Most companies will be incorporated in the UK so this isn’t normally an issue but this demonstrates that the rules are more flexible than some might appreciate – it could be an overseas company with a UK branch / permanent establishment and still qualify
        • For SEIS, the company must have gross assets of no more than £200,000 at the time of the issue of the shares – here we are concerned with total assets on the balance sheet only NOT net assets (ie after deducting liabilities). Where there are subsidiaries, these must be totalled up.
        • For EIS, the gross assets limit is £15m immediately before and £16m after the use.
        • For SEIS, the company must have fewer than 25 employees immediately before the relevant share issue
        • For EIS, the employee limit is 249.
        • The company must be carrying out a qualifying trade – the definition of what constitutes a ‘qualifying trade’ for SEIS / EIS purposes is deduced in reverse by reference to the ‘Excluded activities’ list – so if you’re not on it you should be okay! We’ll cover this in more detail in a future podcast as there are some potential traps here especially for software companies…
        • For SEIS, the company must not have received EIS or VCT monies.

Get email updates (they’re free!).



GF005 Get Funded! SEIS – Make sure you have one of these!

Get funded!In this fifth episode of the Get Funded! podcast, we cover an essential – but frequently overlooked – step that you simply MUST get in place before you raise money under SEIS.

So essential, in fact, that without it, you could mess up the SEIS relief for your investors before you’ve even really got started!

We also cover the maximum amount that you can raise under SEIS being £150,000 and the importance of getting the order right if raising cash under EIS too i.e. SEIS then EIS and not the other way around.

There are changes afoot around the interaction of these reliefs and the “70%” rule but this merits a separate episode – coming soon….! (Subscribe below ;) )

GF004 – Get Funded! Podcast | SEIS | Get ready to slice the pie!

Get funded!In this 4th episode of the Get Funded! podcast we cover:

“Get ready to slice the pie!”

This show is all about the need to issue shares in return for a cash investment if it is to be eligible for SEIS or EIS under current rules.

We also cover what doesn’t qualify e.g. loans, and some tips around types of shares and nominal values of shares to help you get the SEIS share capital structure right from the outset.

Please subscribe and leave us a rating on iTunes – this will help this podcast get found by more entrepreneurs and help the UK get ahead in raising funding for exciting new startups!