funding

What is SEIS/EIS Advance Assurance?

Advance assurance is a confirmation from HMRC that a company should meet the conditions for SEIS or EIS, based on the information provided. It gives investors confidence that their investment will qualify for tax relief before they commit their money.

Example

Before your fundraise, you apply to HMRC for advance assurance. After 4-6 weeks, HMRC writes back confirming your software company should qualify for SEIS. You show this letter to potential angel investors, who can then invest knowing they should receive 50% income tax relief.

How SEIS/EIS Advance Assurance Works in Practice

Advance assurance is a service provided by HMRC's Small Company Enterprise Centre that allows companies to confirm their eligibility for SEIS or EIS before issuing shares to investors. The company submits an application with details of its trade, financials, share structure, and proposed investment, and HMRC provides a written response indicating whether it is satisfied the conditions should be met.

While advance assurance is not a legal requirement for SEIS or EIS investment, it has become a de facto standard in the UK angel investment ecosystem. Almost all angel networks, investment syndicates, and sophisticated individual investors require sight of an advance assurance letter before they will commit funds. Without it, a company will find it extremely difficult to raise SEIS or EIS qualifying investment, because investors have no certainty that their tax relief will be granted.

It is important to understand what advance assurance is and what it is not. It is HMRC's opinion, based on the information provided, that the company should meet the conditions for the relevant scheme. It is not a binding guarantee. If circumstances change between the advance assurance being granted and the compliance statement being filed, or if the information provided in the application was incomplete or inaccurate, HMRC can still refuse to issue compliance certificates. However, in practice, companies that receive advance assurance and maintain the same conditions very rarely have their compliance statements rejected.

The application can cover SEIS only, EIS only, or both schemes simultaneously. Applying for combined assurance is sensible if you plan to raise SEIS first and then EIS within a year or so, as it saves time and gives investors visibility of your full fundraising plan.

Step by Step

The application is submitted online through HMRC's venture capital schemes service. You provide your company details, a description of your qualifying trade, details of the proposed share issue including the amount to be raised and the share price, details of proposed investors if known, and how the funds will be used. You attach supporting documents including your business plan, financial projections, latest accounts or management accounts, articles of association, and cap table.

HMRC's Small Company Enterprise Centre reviews the application and typically responds within 4-6 weeks, though it can take longer during busy periods such as the end of the tax year. They may come back with clarifying questions before reaching a decision. If the application is approved, you receive a letter confirming that HMRC is satisfied the conditions should be met. If rejected, HMRC explains the reasons, and you may be able to reapply after addressing the issues. There is no fee for applying for advance assurance.

Practical Tips

Start the advance assurance application at least 8 weeks before you need to close your fundraising round, to allow for HMRC processing time and potential queries
Have your accountant or tax adviser review the application before submission to catch any issues that could lead to rejection or queries
If your trade is unusual or could be confused with an excluded activity, include a detailed note explaining why it qualifies, citing specific HMRC guidance where possible
Keep a copy of the advance assurance letter and reference number, as you will need the reference when filing the SEIS1/EIS1 compliance statement
If your fundraise amount changes significantly after receiving advance assurance, consider contacting HMRC to confirm the assurance still covers the revised amount

Common Mistakes to Avoid

Applying after shares have already been issued, rather than before the fundraise begins, which defeats the purpose of giving investors pre-investment certainty
Providing insufficient detail about the qualifying trade, leading to HMRC queries and delays of several additional weeks
Not disclosing convertible loan notes or share options that could affect the connected person tests or share structure analysis
Assuming advance assurance is a permanent guarantee rather than a point-in-time opinion that depends on circumstances remaining unchanged
Waiting until investors are lined up before applying, causing delays when HMRC takes 4-6 weeks to respond

Frequently Asked Questions

Is advance assurance legally required for SEIS/EIS?

No, it is not a legal requirement. A company can issue shares and file a compliance statement without having advance assurance. However, in practice, almost all angel investors and networks require it before committing funds, making it effectively essential for most fundraises.

How long does advance assurance take?

HMRC typically responds within 4-6 weeks. During busy periods (particularly around the end of the tax year in March/April), it can take longer. If HMRC has additional questions, each round of queries can add 2-4 weeks to the process.

Does advance assurance guarantee my investors will get tax relief?

No. Advance assurance is HMRC's opinion based on the information provided at the time. If circumstances change, or if the information was incomplete, HMRC can still refuse the compliance certificate. However, if conditions remain the same, it is very rare for a company with advance assurance to be refused at the compliance stage.

Can I apply for SEIS and EIS advance assurance at the same time?

Yes. You can submit a combined application covering both SEIS and EIS. This is recommended if you plan to raise SEIS first and EIS subsequently, as it gives investors and HMRC visibility of your full fundraising plan and avoids needing to submit a separate application later.

Is there a fee for advance assurance?

No. HMRC does not charge a fee for advance assurance applications. The only costs are your own time in preparing the application and any professional fees if you use an accountant or adviser to help.

Source: HMRC VCM30070 - Advance Assurance Applications

SEIS is a UK government scheme that offers investors 50% income tax relief, CGT exemption, and loss relief when they invest in qualifying early-stage companies. Companies can raise up to £250,000 under SEIS.

EIS (Enterprise Investment Scheme)

EIS is a UK government scheme that offers investors 30% income tax relief, CGT deferral, CGT exemption after 3 years, and loss relief when they invest in qualifying companies. Companies can raise up to £5 million per year under EIS.

SEIS3/EIS3 Compliance Certificate

An SEIS3 or EIS3 compliance certificate is a document issued by HMRC to individual investors confirming that the shares they purchased qualify for SEIS or EIS tax relief. Investors need this certificate to claim income tax relief on their Self Assessment return.

Qualifying Trade (SEIS/EIS)

A qualifying trade is a trade that is eligible for SEIS and EIS tax relief. The legislation works on an exclusion basis: most trades qualify unless they are on the list of specifically excluded activities such as property development, financial services, and legal or accountancy services.

Angel Investor

An angel investor is a high-net-worth individual who invests their own money into early-stage companies, typically in exchange for equity. UK angel investors frequently invest through SEIS and EIS to benefit from significant income tax relief, CGT exemption, and loss relief.

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