Funding GuidesApply for SEIS & EIS Advance Assurance: Step by step guide
Jack Dunning
Investment Associate
February 25, 2019

At SeedLegals we’ve helped hundreds of UK startups secure SEIS / EIS Advance Assurance from HMRC. We know it can be hard to navigate what’s needed for a successful application, and any mistakes mean you have to reapply, which can set your funding round back weeks or months!

So we thought we’d put together this handy step by step guide on how to apply. We update this post regularly so you know it’s always up-to-date with the latest SEIS / EIS application rules from HMRC.

If you are doing your SEIS & EIS Advance Assurance application on SeedLegals, and our team will ensure you have everything you need for a speedy acceptance.


How to apply for EIS/SEIS Advance Assurance:

1. Check you qualify

Most companies/products qualify for SEIS and EIS funding, but there are a number of activities excluded from the schemes entirely. First thing to do is check whether your company operates in any of the HMRC excluded activities. The excluded trades include those dealing in land or commodities, those involved in banking, insurance or money lending, those providing legal or accountancy services, those involved in property development, and those generating and exporting electricity, producing coal and steel, or shipbuilding.

If your company is involved in any of those activities then don’t worry, you still might qualify. HMRC requires a substantial element (>20 %) of the companies trade activity to be included in the restricted area. You also need to be directly providing the restricted services to be disqualified from SEIS/EIS, for example, building a technology platform to service financial companies would still qualify.

There are also a number of eligibility criteria that will need to be checked before making the SEIS/EIS application, including:

  • Must have under £200,000 in gross assets pre-money to qualify for SEIS and under £15 million gross assets pre-money to qualify for EIS.
  • Must have under 25 employees to qualify for SEIS and under 250 employees to qualify for EIS.
  • Must have been trading for less than 2 years up until the time you issue SEIS shares, and less than 7 years up until the time you issue EIS shares.
  • Must have a permanent establishment in the UK.
  • Must not be a member of a partnership (LLP).


2. Are you also a Knowledge Intensive Company (KIC)?

You qualify as a Knowledge Intensive Company (KIC) if your operation expenditure includes research, development or innovation expenses, you are developing intellectual property that’s going to be your future main source of business, or you have a percentage (> 20%) of employees carrying out research in a role that requires a Master's degree or higher.

If you think that could be you, it's worth being aware of the benefits which are:

  • Raise up to £10 million through EIS per year (instead of £5 million) and raise a total of £20 million through EIS in the company lifetime (instead of £12 million).
  • You will qualify for EIS within 10 years from the start of trade (instead of 7 years).
  • You will qualify with up to 500 full-time employees (instead of 250 employees).

There is however no need to worry about it unless you need these extra EIS benefits now, you can always apply for KIC status later when you need it!


3. Make sure you have your company’s Unique Taxpayer Reference (UTR) number

You should automatically get sent your company’s UTR number when you register with Companies House. If you cannot find it, you will need to request it online. This process can take about a week so it’s good to find this number in advance of starting the Advance Assurance application.


4. Create your business plan and financial forecast

In January 2018 HMRC changed the rules on SEIS/EIS Advance Assurance applications, and you now need to to include a 3-year business plan and financial forecast at the same level of detail that you would ordinarily provide to investors (think investor pitch deck). If you already have one great, just submit it like it is! If you need to create one, then don’t worry about going into detail, you just need to summarise the company’s business activities, financials, and plan for future growth.


5. Find the name of at least 1 investor

Since the January 2018 rule change, all Advance Assurance applications have to include the name of at least 1 investor. This is a bit of a chicken and egg situation because the startup needs to know who their investors are before obtaining Advance Assurance and the investors will often only commit to investing in a company after they have obtained their Advance Assurance! However don’t worry, this is one of the loosest requirements on the application, you can change the name of the investor after receiving Advance Assurance and they aren’t committed to invest. Don’t make it up! But find somebody who is onbalance likely to invest.


6. Find out when your company started trading

To qualify for SEIS, the date you started trading must be within 2 years of the date of issue of the SEIS shares. For EIS share issue this time limit is 7 years (and for a Knowledge Intensive Company the time limit moves up to 10 years).

To define trading HMRC use the analogy of a shop: if you have something on the shelf that someone could buy even if they don’t, you can turn the sign to “Open” and that’s you trading. This is quite an ambiguous definition! So when quantifying the date of trading it is important to note:

  • The start date of trading will often be the date you first received revenues, if not before.
  • It will almost always be different from your date of incorporation.
  • If you haven’t started trading yet then great! If you demonstrate this in the attached documents this won’t cause any issues.


7. Find out if you have received any “de minimis aid”

De minimis aid (state grants that are given and considered too small to affect competition) received in the 3 years up to and including the date of of the SEIS investment will count towards the maximum cap of £150,000 that can be raised through the SEIS scheme. De minimis aid usually comes from government or university grants (except Innovate UK, this is normally excluded).

For example, if you received a £100,000 grant this will have to be declared when making your SEIS/EIS Advance Assurance application. The maximum amount you can receive in SEIS investments will be reduced to £50,000.

Whether or not the aid you received is “de minimis” is really judged on a case by case basis.

They usually make it clear at the time of issuance if you have received de minimis aid, so you should know if you have! And if you have, you just need to submit the details of the aid along with your application!


8. Fill out the HMRC Advance Assurance Application Form (VCSAA v1.0)

Once you have collected all the information above you will need to fill out the application form. This bit is pretty easy! If you are doing the Advance Assurance Application through SeedLegals you can easily access, fill out, save and download the form from our platform!


9. Write a cover letter

At SeedLegals we have helped hundreds of startups secure Advance Assurance. From our experience we have found it helps to include a cover letter in your application that makes all the important information easy to see for the reviewer.

We recommend you include information such as:

  • Summary of the company
  • Upcoming and existing funding round documentation and details
  • Investor details
  • Company financial summary

The cover letter is another feature that, if you do your Advance Assurance application through the SeedLegals platform, we will automatically create the document for you!


10. Check all the documentation

If you're doing Advance Assurance application on the SeedLegals platform, our team will ensure you have everything is in place. We get sent Advance Assurance applications to review every day, so we know what things HMRC are looking out for, the things that HMRC neglect to tell you on their website! Remember to include your application form and all the additional documentation need for the application including:

  • Business plan
  • Financial forecast
  • Bank statement/accounts
  • Information about grants/previous investments
  • Cover letter


11. Email the documents to HMRC

Once you have all the documentation and they have been successfully reviewed well done! Email them all to HMRC at enterprise.centre@hmrc.gsi.gov.uk. In our experience emailing is a faster way of getting your application processed and usually knocks off about a week of the wait time.

Remember, attach all your files individually as pdfs!

And once you have emailed you can sit back and wait! Your application should be processed in roughly 3-6 weeks (and for startups using SeedLegals application service, it can be as fast as 1 week!).


Need some help? Find out more about SeedLegals SEIS/EIS Advance Assurance service or book some time with an expert here.

Jack Dunning
Investment Associate
February 25, 2019