How to apply for Advance Assurance on a venture capital scheme

Advance Assurance is a government scheme for companies seeking seed funds to allow them to provide a greater level of reassurance to potential investors that the proposed investment is likely to meet the qualifying criteria for a specific venture capital scheme’s tax breaks.

You can make an Advance Assurance application via the government portal here for three schemes currently provided by HMRC. These are the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT). Which scheme is appropriate for your company will depend on the nature of the company and the level of investment you are seeking.

Use an advisory service such as Sleek to make this decision, and to make the process of getting EIS and SEIS Advance Assurance more efficient. After collecting all the relevant information, we can handle all of the admin for you.

Conditions for applying

First and foremost, your business will have to be established in the UK and registered with Companies House. The company’s primary revenue source must also be from a qualifying trade. 

Most trades qualify but there is a list of exempt industries that will not allow tax relief afforded by the governments’ venture capital schemes if 20% or more of your business is done in these sectors. This includes areas like steel and coal production, property development, financial services and energy projects. A full list can be found here.

As an Advance Assurance application can be made for all four government venture capital schemes, you’ll have to ensure your company obtains advanced assurance on the appropriate scheme for the status of the business.

You’ll also need to already have a list of potential investors for HMRC to determine if the potential investment is likely to be approved for the targeted venture capital scheme, based on eligibility from both sides of the proposed investment.

Keep in mind that the official documentation provided upon you successfully obtaining assurance is carefully worded. HMRC only states that an investment proposal is likely to be eligible for a venture capital scheme and is not confirmed.

Wondering about VCT investments? If so, check out our article “The Venture Capital Trusts (VCT) Scheme”. 

Who can apply

Applications must be made by either:

• A company director
• A company secretary
• An agent on behalf of the company
• A trustee (for charitable trusts)

A fund manager can’t apply for Advance Assurance and agents must be authorised on your behalf. You’ll also need a signed letter of authorisation dated within the last three months. They will also need to formally gain authorisation for every new application on your behalf even if it’s for the same kind of assurance, i.e on two consecutive applications for Social Investment Tax Relief.

Whoever makes the application will need to be able to readily access any supporting documents required by HMRC as covered in the next section.

Not sure about SEIS funds? Click that link to our article to find out more!

What you’ll need to include when applying for Advance Assurance

While applications are now made directly to the venture capital reliefs team via the HMRC portal instead of in writing for most schemes, the documentation required hasn’t changed significantly.

It’s a good idea to have the following easily accessible before making an application:

• Your latest accounts where possible i.e income tax etc.
• Business plan and financial forecasts
• Equivalent governing documents for charitable trusts
• Forecast of your targeted raised funds
• A list of which potential investors the assurance will be used for
• Information on trading activities the money raised will be used for with estimations on what each activity will cost
• The most recent copy of any proposal documents utilised to make a pitch to investors 
• Recent articles of association and memorandum with details of any planned changes
• Investments details with information on any venture capital schemes used to receive previous investment
• A recent list of the registered members as of your application date
• Information on any other agreements between your company and shareholders i.e. a loan agreement
• Formal company’s authorisation in the form of a signed letter from a director or trustee for any agent acting on the company’s behalf
• A completed checklist for the applicable scheme
• Any other supporting documents requested by HM revenue detailing your qualifying conditions when making an application through the portal i.e. a compliance statement or other documents detailing other ways you claim tax relief

Curious about EIS benefits? If so, check out our article “How small businesses can take advantage of the SEIS and EIS schemes”. 

Conclusion

As you’re an SME seeking to use SEIS for funds to grow your business, Advance Assurance could be a key tool to entice investors. For support throughout the process, contact Sleek. With SEIS and EIS experts in house, we can help you to navigate the paperwork and get approval efficiently. Get in touch for an initial consultation on which scheme would be right for you.

Get investor-ready with Sleek – it’s fast and simple. SEIS Advance Assurance is a government-backed statement that shows investors that investing in your business will allow them tax relief. Sleek helps get your company set up for investment, so you can start growing your business.

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