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Do I need “advance assurance” for SEIS / EIS?

Advance assurance is a process where HMRC’s approval for a proposed investment can be obtained for the purposes of qualifying for S/EIS. It is not required, but is recommended if any certainty is required in relation to the S/EIS status of the company and proposed investment.

However, although it is not an HMRC requirement, many S/EIS investors will require advance assurance as a condition of their investment.

Note that:

  • if you’ll be applying for advance assurance you should factor this into your timetable for the investment – HMRC could take six to eight weeks to respond to applications (although they tend to respond much quicker than this in straight forward cases);
  • HMRC will not give advance assurance for speculative investments: generally one or more investors must be named in the application;
  • advance assurance is only as good as the application which underpins it. If the application misses out certain information or misdescribes something then the assurance may not be valid.. The application should set out full details of the proposed investment, and needs to include a number of supporting documents including copies of the final (or near final) investment documents which the investors will be signing up to;
  • advance assurance will only be given by HMRC prior to the entry by the company into any Advance Subscription Agreement (see “What is an ASA?”) in respect of the investment (i.e. it is not possible to sign up to an ASA then retrospectively obtain assurance for the investment under that ASA, even though shares are not issued until later);
  • the process for submitting the application in terms of gathering information and documents is similar to that required to complete form EIS1 (which has to be submitted in order for the investors to claim the relief following completion). Therefore there is not much of a time/cost saving involved if advance assurance is avoided, because the process of submitting the EIS1 form post-investment is much quicker if assurance has been obtained.

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