Does SEIS/EIS Advance Assurance expire? For how long is it valid?

Got your Advance Assurance? Congrats! Founders often ask us if Advance Assurance has an expiry date. It doesn’t. But your Advance Assurance will lapse and you won’t be able to offer SEIS/EIS tax relief to your investors if there are changes to your company’s situation that make it no longer eligible for SEIS/EIS.

In this post, we explain how and when your SEIS/EIS Advance Assurance can expire.

In this post

• If you’re no longer eligible, Advance Assurance is invalid
• If you pivot, you could reset the clock to raise with EIS
• If you’re over the time limits, your Advance Assurance might be invalid
• If you’ve ever raised with EIS, you might be able to keep raising (up to a limit)
• Talk to an expert

If you’re no longer eligible, Advance Assurance is invalid

SEIS/EIS Advance Assurance isn’t a guarantee that investments in your company will qualify for tax relief. It’s proof that if nothing changes for the company, and the deal documents for the SeedFAST or funding round are in line with the documents shown to HMRC when you applied for Advance Assurance, then the investments should qualify.

And Advance Assurance can’t tell you if your investors themselves are eligible for SEIS / EIS tax relief.

If it helps, you can think of Advance Assurance as an assurance that the investment is not disqualified.

If you’re over the time limits, your Advance Assurance might be invalid

When it comes to SEIS and EIS Advance Assurance, there are some time limits to watch out for. If you go over these, your Advance Assurance is invalid and an investment in your company won’t be eligible for the scheme:

• For SEIS, your company must have been trading for less than three years up to the time you issue SEIS shares
• For EIS, your company must have been trading  for less than seven years up to the time you issue EIS shares
• If you qualify as a Knowledge Intensive Company (KIC), your company must have made its first commercial sale less than 10 years before you issue EIS shares or – if you choose – the date when your company reached an annual turnover of £200,000

If you’ve ever raised with EIS, you might be able to keep raising (up o a limit)

If you’ve raised some EIS investment in the first seven years you were trading (ten years for Knowledge Intensive Companies, KICs), you can then submit a new application for Advance Assurance under what’s known as Condition A.

You can continue to raise with EIS for as long as you like, as long as:

• your company’s need for investment beyond the limit of seven years (ten years for KICs) was anticipated in the pitch deck you sent when you first applied for Advance Assurance

and:

• your trade is still the same (and not an excluded activity)

There’s a limit to how much you can raise though:

• no more than £5 million in any 12 months (£10 million for KICs)
• £12 million in total (£20 million for KICs)

Read more about Condition A in our post, EIS: What to do if you have been trading for more than 7 years and want to issue EIS shares

If you pivot, you could reset the clock to raise with EIS

If your company is beyond the trading limit for EIS and you start a new business activity that HMRC considers to be a new startup for the purposes of the scheme, then you can reset the clock to raise with EIS.

This is called Condition B – if you can show HMRC that your pivot, whether it’s a different product or geographical market, makes your company very risky, then you can reset the clock for EIS. (Not for SEIS – this only applies for EIS.)

Read more about Condition B in our post, EIS: What to do if you have been trading for more than 7 years and want to issue EIS shares

Talk to an expert

Got questions about SEIS / EIS? We’ve helped thousands of companies obtain Advance Assurance and our SEIS/EIS experts are here to help you. To message us, hit the chat button (at the bottom right of your screen).