The Seed Enterprise Investment Scheme (SEIS) is a powerful source of funding that bridges the gap for many early-stage companies in the UK.
The advance assurance is a key tool for investors to ensure companies are compliant with SEIS rules. Before closing an investment, most will and must ask for an advance assurance that the investment is eligible, issued by HM Revenue & Customs (HMRC). This ensures investors will be able to claim their SEIS tax relief and avoids any surprises down the line.
The SEIS advance assurance is issued by HMRC and confirms that a company will be SEIS compliant based on the information that the applying company has submitted. This is part of HMRC’s Venture Capital Schemes (VCS) advance assurance in which you can apply for multiple schemes at once.
For startups, getting advance assurance early on is a key step in their fundraising journey. It is not a legal requirement but many SEIS investors wouldn’t be comfortable investing without it. Especially if time is of the essence, for example at the end of the tax year, having an advance assurance can accelerate the investment process, making prepared companies more likely to get funding.
SEIS funds often require companies to get advance assurance before starting the investment process. Consequently, the logical step for founders was to approach HMRC directly for this assurance before approaching investors. This method, however, overwhelmed HMRC to the extent that they began accepting applications only if they included details of prospective investors.
Just as intended, this deters some founders who would otherwise have submitted a speculative application. You need to give the name, address and intended amount, but the person does not need to end up investing. However, you might need a letter of engagement if the prospective investor is not an individual, but a fund. So, it has now become standard to establish an initial relationship with funds before obtaining advance assurance.
In their application, HMRC will ask you to provide some information, which contains:
You can simply apply online via the GOV.UK website.
Once you've received SEIS advance assurance, you are able to go back to your investors and close your funding round. After the shares are issued, you'll need to complete and submit an SEIS1 form to HMRC, detailing the investment and requesting compliance certificates for your investors. Upon approval, HMRC will issue SEIS3 certificates, which you then distribute to your investors so they can claim their SEIS tax relief.
During this process it’s important to maintain good records of all transactions and communications with HMRC and investors, as accurate documentation supports the legitimacy of the tax relief claims and helps ensure compliance with SEIS regulations.
The advance assurance from HMRC does not expire. However, the details as initially provided might have changed, making it necessary to reapply.
The processing time for SEIS advance assurance can vary, but it typically takes about 4 to 6 weeks. However, this timeframe can be longer during peak times or if additional information is required.
No, SEIS advance assurance does not automatically mean EIS (Enterprise Investment Scheme) assurance. However, it is possible to apply for advance assurance for both schemes at the same time.
Website of UK Government - Apply for advance assurance on a venture capital scheme