On 10 October 2019, HMRC updated the Advance Assurance guidance contained in the Venture Capital Manual (‘VCM’), you can find this here. The most notable change was the introduction of a checklist that now must be completed and submitted along with any Advance Assurance application to the Venture Capital Reliefs Team (‘VCR Team’) at HMRC.
The checklist is not designed to be a hurdle in seeking Advance Assurance. It acts as a helpful tool to ensure you understand and can provide evidence that the company meets the conditions for SEIS or EIS. Often, companies don’t provide the correct information the first time around, which can lead to delays; the checklist is intended to prevent this. This will help the VCRT deal with the applications efficiently, meaning your application could progress more quickly!
The checklist is divided into two parts. Section one goes through the supporting documents and information that needs to be included in the Advance Assurance application – which conveniently remains the same, with the exception that you also have to provide your company’s register of members. In the format of a table, the checklist sets out the information required and allows the company to either provide supporting documents or provide an explanation.
Section two goes through the specific conditions the company has to meet for the investment to qualify as SEIS or EIS, and it links to the relevant guidance within the VCM. These conditions are also set out in the SEIS or EIS compliance statement (to be completed once the investment is received and shares are issued), where it is a tick box exercise. You will just need to confirm the company meets the condition. If not, or you are unsure, then you can provide further details.
Advance Assurance is a valuable service provided by HMRC, which gives comfort to prospective investors; we are pleased to see HMRC taking steps to improve and streamline the process. If you have any questions, don’t hesitate to get in touch.
Three Things to remember when applying for Advance Assurance
1. Get the advance assurance application in as soon as possible! HMRC aims to respond to most applications within 15 working days, and no later than 40 days. It could be longer if they require further information.
2. You will need to provide details of your investors. For each of these investors, you will need to include their name, address and expected investment. This was introduced by HMRC in 2018 so that they could focus the service to companies that intend to use the scheme – they had found that 30% of the Advance Assurance applications received were speculative and did not result in an investment. You won’t need to do this if you raise on Seedrs, you simply need to provide HMRC with our signed engagement letter.
3. Remember that Advance Assurance is not compulsory but it provides comfort to investors. It is our policy to only mark a pitch as an SEIS or EIS opportunity if the company has successfully received advance assurance.
Seedrs does not provide legal, financial or tax advice of any kind, and nothing in this guide constitutes such advice. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with Seedrs or its affiliates, you should consult a professional adviser.
