{"id":65958,"date":"2021-09-07T14:17:53","date_gmt":"2021-09-07T06:17:53","guid":{"rendered":"https:\/\/zegal.com\/?p=65958"},"modified":"2023-06-22T18:53:42","modified_gmt":"2023-06-22T10:53:42","slug":"seis-advance-assurance","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-gb\/blog\/post\/seis-advance-assurance\/","title":{"rendered":"SEIS advance assurance"},"content":{"rendered":"

Obtaining SEIS Advance Assurance is a complex, time-consuming, but nevertheless vital process that most companies go through in order to succeed under the scheme and benefit from the variety of tax reliefs offered to investors. In this article, we provide an overview of the scheme, the importance of HMRC Advance Assurance, and how your company can proceed with obtaining it.<\/span><\/p>\n

<\/span>What is SEIS Advance Assurance?<\/b><\/span><\/h2>\n

Before understanding how SEIS Advance Assurance operates for businesses and their investors, it is first necessary to define SEIS. The SEIS stands for Seed Enterprise Investment Scheme<\/strong> and was established by Her Majesty\u2019s Revenue and Customs (HMRC) to encourage greater investment in seed-stage and growth-focused companies, as well as support entrepreneurship by providing income tax relief to UK taxpayers. <\/span><\/p>\n

The benefits of this scheme specifically aim to stimulate greater investment in early-stage companies by providing prospective investors with income tax relief at a rate of 50% on the value of the investment. In addition, investors can also benefit from Capital Gains Tax (CGT) relief within SEIS. <\/span><\/p>\n

However, these benefits to investors are contingent on the companies qualifying as eligible under the SEIS scheme, which can only be granted by HMRC after the investments are made. SEIS Advance Assurance, as its name suggests, therefore allows companies to receive a provisional indication from the HMRC that their company is eligible to apply for tax relief for their investors. In turn, this provides investors with assurance that the company they invest in should be eligible to offer the various tax benefits stipulated under the SEIS scheme before they choose to do so. <\/span><\/p>\n

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<\/span>What is the difference between SEIS and EIS?<\/b><\/span><\/h2>\n

While both the SEIS and EIS are government-backed venture capital schemes designed to help small to medium-sized companies and social enterprises grow by attracting investment, they differ in terms of the size of the company that each scheme caters to, as well as the tax benefits specifically that are on offer. <\/span><\/p>\n

The SEIS, as previously mentioned, is designed for very early-stage startups looking for seed investment. With a maximum cap of \u00a3150,000, this scheme is designed for initial \u201cfriends and family\u201d rounds. Alternatively, The EIS, which simply stands for Enterprise Investment Scheme, is appropriate for larger investments made towards bigger companies – operating for up to 7 years and raising up to \u00a312m. <\/span><\/p>\n

<\/span>How do you qualify for SEIS and EIS? <\/b><\/span><\/h2>\n

Before you can present your investors with proof of Advance Assurance from HMRC, you will need to make sure that your company qualifies for one or both of the schemes. Qualification under both schemes, as mentioned above, is based on how early-stage your company is and how much money you have already raised. The table below summarises the position under both schemes.<\/span><\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n
SEIS<\/b><\/td>\nEIS<\/b><\/td>\n<\/tr>\n
Maximum raise of \u00a3150,000.<\/span><\/td>\nMaximum raise of \u00a35m in any tax year. A lifetime amount of \u00a312m (or \u00a320m for \u2018knowledge intensive\u2019 companies).<\/span><\/td>\n<\/tr>\n
You must spend the money on a \u2018qualifying trade\u2019 (see below).<\/span><\/td>\n<\/tr>\n
Trading for less than 2 years.<\/span><\/td>\nTrading for less than 7 years, (or 10 years for \u2018knowledge intensive\u2019 companies). <\/span><\/td>\n<\/tr>\n
Less than 25 employees.<\/span><\/td>\nLess than 250 employees (or 500 for \u2018knowledge intensive\u2019 companies).<\/span><\/td>\n<\/tr>\n
Gross assets up to \u00a3200,000.<\/span><\/td>\nGross assets up to \u00a315m.<\/span><\/td>\n<\/tr>\n
Your company must be \u2018permanently established\u2018 in the UK, (see below).<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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<\/span>How do you get SEIS Advance Assurance? <\/b><\/span><\/h2>\n

Application forms for obtaining SEIS Advance Assurance will need to be submitted directly to the <\/span>HMRC<\/span><\/a> who will assess whether your company meets its criteria for SEIS eligibility; this process generally takes up to 6 to 8 weeks. This process can be both complex and time-consuming, but is nevertheless vital to obtaining the assurance that your investors value, so it\u2019s important that you do it right. At Zegal, our expert team is significantly experienced in dealing with HMRC processes and can assist you with constructing your application for obtaining SEIS Advance Assurance before your first round.   <\/span><\/p>\n

However, if you are planning to handle the application for Advance Assurance yourselves; it is important you note the following details that will need to be provided to HMRC:<\/span><\/p>\n