- 20th January 2018
- Posted by: Edward Kirkby
- Category: Seed Enterprise Investment Scheme (SEIS)
At Accounts Lab we are experts in obtaining SEIS advance assurance. So much so, we offer free SEIS advance assurance for all startups!
These tax advantaged venture capital schemes provide extremely generous tax breaks to investors.
Investors under the Enterprise Investment Scheme receive 30% tax relief, and providing shares are held for the qualifying 3-year period, there is an exemption for any capital gains. Individuals can invest up to £1,000,000 in any tax year.
Investors under the Seed Enterprise Invest Scheme receive 50% tax relief, and providing shares are held for the qualifying 3-year period, there is an exemption for any capital gains. Individuals can invest up to £150,000 in any tax year.
There are further requirements that must be met in order for a company to qualify under EIS/SEIS, and HM Revenue & Customs provide an ‘advance assurance’ process where companies can seek assurance that any investment in them will qualify. This gives investors assurance that their investments should be eligible for tax relief based on the information that has been provided. Ultimately, this makes the investment more attractive to potential investors
From January 2018, HMRC will not provide advance assurance on speculative applications. More than a third of the advance assurances that HMRC provide do not result in an investment. To ensure resources are used efficiently, HMRC we will only provide an opinion where the application names the individual(s), fund manager(s) or other promoter(s) who are expected to make the investment.
Full details of the HMRC advance assurance changes can be found at at VCM 14030 / 35030.
They do not expect the company making the application to have formalised offers of investment, but they do expect the company to have approached potential investors before making the advance assurance application to determine the likelihood that they will attract actual investment.
This change has already started catching companies out, with advance assurance applications being returned citing the above new guidance.
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