Most investors will ask to see an advance assurance for SEIS, EIS or both before investing in your company. An advance assurance is simply a letter from HMRC that says your company and your fundraising round will be eligible for relief under SEIS or EIS.
It’s really important – it gives your investors some excellent tax reliefs if they are eligible.
To obtain an advance assurance, you need to send an application and certain information to HMRC. This includes:
- The right form – available here. For now, you can download it and complete it, but soon this will be a fully online process. I was consulted by HMRC on this process and it’s good!
- Your business plan.
- A cover letter detailing the key information about your company, including what the business does (it must be a “qualifying trade“), how much you are raising and use of funds etc.
- Your articles of association and any shareholders agreement.
- Your most recently filed accounts (if any) or some projections if not (a P&L and balance sheet will do).
- Depending on how busy HMRC is, it usually takes around 4-6 weeks for advance assurance applications to be processed.
Can you do it yourself?
Yes! If you have the time to get your head into the process to get a reasonable understanding of the rules.
If your company is brand new, has little history, a straightforward structure and is not part of a group, doing it yourself should not be problematic. If you go it alone and have the odd question or 2 along the way, we would be happy help, please just contact us.
What can go wrong if you do it yourself?
If the company has a long trading history, a trade which wanders into one of those that isn’t clearly a “qualifying trade“, is part of a group, is not a UK company, has multiple share classes, has acquired its trade from somewhere else (to name a few examples!), it might not be as straight forward to make the application correctly yourself.
The most common mistakes we have seen are usually not fatal to the application but tend to cause delays. This can be a big old pain when your startup has no cash and you have an investor ready to wire on sight of your advance assurance.
Common mistakes include not including all the information that HMRC needs to see to grant the advance assurance, submitting the company’s current articles and not those that will be place when the round closes and failing to recognise key information that should be disclosed and having an advance assurance granted where actually it should have been refused.
Every application we have made for an advance assurance has been approved by HMRC, including those made for my own companies, TableCrowd and SilkFred.
We’re here to help, if you would like a quote, please get in touch.