EIS: income tax relief: company and investor procedures: advance assurance requests: overview
Companies that are hoping to attract subscriptions under the EIS are encouraged to seek an assurance from HMRC, in advance of inviting applications for shares. The assurance facility allows the company to provide information about its structure and activities as the company intends them to be; and about the proposed investment including how the company intends to use the monies raised. Based on the information provided, HMRC will provide an opinion as to whether we would be able to authorise the company to issue compliance certificates (forms EIS3 - see VCM14110) were the company to carry out its intentions as described and then to submit a compliance statement (form EIS1 - see VCM14090) following an issue of shares. This requires HMRC to form a view at the time of an advance assurance application, as to whether the conditions of the scheme would be satisfied to the extent they need to be satisfied at the point a company provides its compliance statement.
Requests can be dealt with only if they come from the company’s secretary or directors or from some person authorised by them to negotiate with HMRC on their behalf. The rules of confidentiality apply, and potential investors making enquiries about a company should address those enquiries to the company itself.
An advance assurance is given in respect of a particular issue of shares and companies should be aware that an assurance given in respect of one share issue should not be regarded as providing assurance in respect of a different share issue.
We will not provide an advance assurance on speculative applications. We will only provide an opinion where the request names the individual(s) who are expected to make the investment or the fund manager or other promoters who are to provide the investors. 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.
Where we do provide an assurance this is only given in respect of the conditions that apply to the company and the particular share issue, it is not an assurance as to the availability of relief to any particular investor.
Form SEIS/EIS(AA) is available on the HMRC website at https://www.gov.uk/government/publications/enterprise-investment-scheme-advance-assurance-application-eisseisaa for companies who wish to make an application for an advance assurance. It is not compulsory to use it but companies are recommended to do so as a useful way of giving all the information needed. To assist with the processing of an application it is helpful if the company can provide a contact telephone number in case it is necessary to discuss the application.
That form mentions the company’s need to be able to complete the declaration on form EIS1 when shares are issued. Form EIS1 is also on the website - see VCM14080.