EIS SEIS legal advice and Advance Assurance

Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are schemes designed to help small or medium sized companies raise money by offering tax reliefs to individual investors.

SEIS/EIS relief is often a pre-requisite for attracting investors to subscribe for shares in your company. Investors will usually expect you to have applied for ‘advance assurance’ from the HMRC that the shares will qualify for SEIS/EIS relief.

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As part of an application you will need to submit the following documents and information:

  • covering letter – this will need to be detailed and clear clarifying any ambiguous points for HMRC and confirming the main ways that your company and the share offer meet their requirements;
  • seis advance assurance / eis advance assurance application form;
  • latest company accounts and accounts of any subsidiary company;
  • details of all trading or other activities to be carried on by the company and any subsidiary and details of which company(ies) will use the money raised by the share issue;
  • the latest pitch deck or similar document (such as a business plan);
  • an up-to-date copy of the Memorandum and Articles of Association with details of any changes to be made;
  • details of any subscription agreement or other side agreement to be entered into by the shareholders;
  • any other information relevant to this application;
  • SEIS applications only – details of any other ‘de minimis aid’ received; and
  • SEIS applications only – confirmation that no shares which qualified for EIS have previously been issued or that the company has not received any previous investment from a Venture Capital Trust

Naming investors

Names of prospective investors now needs to be provided in the advance assurance application. Provision 2.8 of HMRC’s advance assurance guidance note states:

“From 2 January 2018 we will not provide an advance assurance on speculative applications. More than a third of the advance assurances we provide do not result in an investment. To ensure HMRC resources are used efficiently, therefore, 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. Though we do not expect the company making the application to have formalised offers of investment, we 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.”

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Risk-to-capital condition

HMRC has also issued guidance on new the new ‘risk-to-capital’ condition relating to EIS schemes, introduced by Section 14 of the Finance Act 2018. The risk-to-capital condition is intended to prevent capital preservation arrangements by requiring an investment in the schemes to meet both of the following conditions:

  • the company in which the investment is made must have objectives to grow and develop over the long term; and
  • the investment must carry a significant risk that the investor will lose more capital than they gain as a return (including any tax relief).


You should expect HMRC to provide the advance assurance within four weeks.

Formal approval of SEIS/EIS relief 

Once advance assurance has been obtained and shares issued, before investors can claim any tax relief the company must complete form SEIS1/EIS1 and send it to the Small Companies Enterprise Centre (SCEC). The SEIS1/EIS1 form can only be submitted when the company has been trading for four months or, if not yet trading, at least 70% of the money raised has been spent.

If SEIS/EIS relief is formally approved, the SCEC will send the company a certificate confirming this together with SEIS3/EIS3 claim forms for the company to send to each of the investors so they can individually claim the tax reliefs they are entitled to.

Subsequent SEIS/EIS round 

Separate SEIS/EIS paperwork will be required for each round of fundraising.

Are you thinking about applying for SEIS/EIS advance assurance?

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