What Is Advance Assurance?
Advance Assurance is approval from HMRC that an investment in your company is likely to qualify for tax relief. Advance Assurance does not guarantee that your investment will meet the conditions, but you can use it to attract investors by showing investors your proposed investment is likely to qualify.
Is it a legal requirement?
Advance Assurance is not a legal requirement to qualify for the scheme or even to bring on board investors. It is used as a way to give investors confidence in your investment and that the investment is likely to give them tax benefits.
Please be aware that HMRC Advance Assurance is definitely not a guarantee that your investment will qualify for a scheme. Advance Assurance will also not tell you if your investors meet the conditions of the venture capital scheme. It helps to think of Advance Assurance more like an assurance that your investment is not directly disqualified.
Nevertheless, it’s still one of the most sought after documents prospective investors in your company will want to see. Around 2/3s of UK angel investors won’t invest a company if they think they might not qualify.
Advance Assurance can be obtained for schemes such as the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) Social Investment Tax Relief (SITR) and Venture Capital Trust (VCT) investment schemes.
How to apply for SEIS / EIS Advance Assurance
You can apply for Advance Assurance directly with HMRC or via SeedLegals. SeedLegals is currently the UK’s no.1 one destination for startups to secure SEIS / EIS Advance Assurance, with an approval rate of 97% compared with the 68% industry average. A helpful team will make sure you have everything you need to get a smooth approval. Just sign up and complete the Advance Assurance application form to get started here.
What are the criteria for applying for Advance Assurance?
There are some eligibility criteria that you must meet before you can apply for advance assurance.
More recently, the approval criteria has become trickier to meet. This is because of new investment criteria introduced in 2018 which requires companies to submit a range of additional info, including:
– Names and addresses of prospective investors
– A business plan (with a bit of depth to it)
– Evidence your investment satisfies the risk to capital condition.
These new criteria were brought in because HMRC were finding that approximately 30% of approved applications were speculative and didn’t result in investment.
You can easily demonstrate this minimum amount of investor interest in your funding round on the SeedLegals. Alternatively, start your application and our friendly team will hop in to ensure everything you need is in place.
Where to send the Advance Assurance form
You can send your Advance Assurance application by email or post. You can email your application to firstname.lastname@example.org or post it to:
Venture Capital Reliefs Team
HM Revenue and Customs
How long does advance assurance last?
Your Advance Assurance does not have any particular expiry date. It will lapse if there are any changes to your company’s situation that make it no longer match the criteria for SEIS/EIS eligibility.
However, it is important to keep in mind that there are still certain circumstances in which an Advance Assurance can expire… and there are ways to extend these limits!
How long do HMRC take to approve SEIS Advance Assurance?
It’s usually 6-8 weeks for HMRC to approve an SEIS/ EIS application though we usually see ours being approved in 2-3 weeks, here at SeedLegals.
Hit the chat feature to speak to a member of the SeedLegals team about submitting your Advance Assurance application.