Step-by-Step Guide on Completing the Advance Assurance Form
The advance assurance form can be sent to HMRC in order to receive pre-approval for your SEIS or EIS investment.
The form can be completed on the HMRC website here. The same form is used for both SEIS and EIS.
The form is relatively easy to complete and we usually encourage applicants to apply directly themselves.
Please see our notes below for help on completing the form.
Page 1 - Basic Company Details
- The name of the company should match exactly what is listed on Companies House (you can check here).
- The Corporation Tax reference, also know as the company's 'UTR' (unique taxpayer reference) is a ten digit number, often preceded by a three digit prefix. For the purposes of this form you can omit the three digit prefix. It should appear on any letter HMRC has sent to your company regarding corporation tax. If you don't have your company's UTR you can request it online here.
- These details should match exactly what is listed on Companies House (you can check here).
Page 2 - Contact Details
- We recommend ticking the first box to enable email communication, as it will facilitate the process and allow quicker communications. You will then need to tick three boxes to confirm you understand the risks associated with using email (this is standard wording for HMRC who are always a little cautious about using email to communicate).
Page 3 - Investment Details
- Tick whether SEIS, EIS or VCT applies to you. For the majority of you, SEIS or EIS will be relevant. VCTs are listed companies that are run by a fund manager that invest in smaller unquoted companies.
- For SEIS applications the company can raise a maximum of £150k; this limit is raised to £5m for EIS companies. HMRC will not hold you to this amount; as plans change and investors can pull out.
- The date of the first commercial sale is important as this sets the time limit for the two year window for SEIS investment and seven years for EIS investments. In some cases, for knowledge intensive companies, the window is extended to ten years.
- A brief description of what you plan to do with the money raised should be provided. HMRC are looking at whether you will be spending the investment on normal business activity (such as staff costs, marketing, business development, product development etc.). If you were planning to spend the SEIS or EIS investment on things like purchasing land, making investments or buying other companies, then the application may be rejected.
- For SEIS, companies must have 25 or fewer employees at the time of investment. This limit is raised to 250 employees for EIS companies.
- The gross asset test is the sum of the current assets and fixed assets of the business. Typically this would be the sum of the cash held at bank, equipment, property and any other assets owned by the business. SEIS companies must have less than £200k of gross assets in order to qualify (the SEIS investment itself doesn't count towards this limit). EIS companies have a limit of £15m.
Page 4 - Supplementary Information
- The business plan should provide enough information to enable HMRC to verify that the business does not fall within one of the excluded activities listed here.
- The purpose of the prospectus or 'investor deck' is to give HMRC comfort that you are a legitimate business seeking investment.
- The company's memorandum can usually be found on the companies house website here. Typically you will have the model articles of association (here); but if you have had them amended you will need to include them with the application.
- Details of prospective investors are a new requirement from HMRC.
- Details of the company's objectives to grow and develop its trade in the long term can be held within the business plan. This should not be difficult to demonstrate, as most businesses have plans to grow and develop in the long term.
- Details of the subscription agreement, or the shareholder agreement, should be provided. This is an important one and can be where some applicants trip up. The key point here is to ensure that all (S)EIS investors are receiving ordinary shares that are of the same economic value of the other shares that are in issue. You cannot give preferential returns to (S)EIS investors (such as first call on profits or guaranteed returns) and you cannot have side agreements or special deals for investors (which are seen as returns of value). The simpler the agreement, the more likely it is you will qualify, as complicated and non-standard agreements typically contain a clause which rules you out of SEIS.
- You do not have to submit a subscription agreement with your application as you can send this to HMRC at a later stage. We would recommend having a lawyer draft the agreement and ensuring that they are aware this will be as SEIS (or EIS) investment.
- Most start-ups won't have company accounts yet. If you do have a filed set of accounts you should include them with your application. EIS applicants will typically want to attach their latest accounts.
- EIS applicants must provide further details about how the funds will be used for 'growth and development'. Further information about this criteria can be found here.
- SEIS applicants must provide details of any 'de minimis' state aid received; typically this would be grant funding. Details of this can be entered into the cover letter (see below).
- You can check here if you need to apply as a knowledge intensive company.
We would recommend including a simple cover letter with the form. Sample wording suggested below:
Application for (S)EIS advance assurance: Barnes & Scott Ltd
Please find attached the completed advance assurance form for Barnes & Scott Ltd.
Barnes & Scott Ltd has not yet raised investment under SEIS or EIS and is looking to raise £250k over the coming months, with potential further investment following further development of the product. The company’s business activity is the development of a mobile application that allows clients to submit tax returns directly to HMRC using third party accounting software such as Xero or Quickbooks. The company will earn revenues through subscription fees, commissions and through advertising to its customer database. The investment will be used to develop the application and the website, increase marketing activity and hire new development staff.
The company’s memorandum and articles of association have been attached with this application. As a start-up the company does not have any accounts yet. For this round of investment we will not be signing shareholder agreements, however we will have a simple subscription agreement in place which will be drafted by a lawyer. We will ensure that the subscription agreements comply with the SEIS regulations and are taking legal and tax advice to ensure this is the case. The company has not received any state aid and does not intend to in the future.
Details of potential investors are as follows: Bob Smith of 61 Thorpe Road, London, UK and Amanda Jones of 5 Goldsmith Lane, Bath, UK.
There are no particular issues which I consider might mean that the company does not meet the requirements of the SEIS scheme. Should you require any further information please contact me directly.
Director of Barnes & Scott Ltd
Submitting the form
Email is the best way to submit the form (it is quicker than post and you have an audit trail if you need).
You should send the application to firstname.lastname@example.org.
HMRC's contact details are here.