EIS: income tax relief: company and investor procedures: advance assurance requests: overview
Companies that are seeking subscriptions under the EIS may seek an assurance from HMRC that a prospective investment is likely to be eligible, before issuing the shares.
The advance assurance service is discretionary and non-statutory. There is no requirement for a company to obtain an advance assurance before receiving an investment or issuing shares to investors.
The advance assurance service allows the company to provide information about its intentions; about its structure and activities, about the proposed investment and about how the monies raised will be used.
See VCM14080 for the statutory procedures to be followed once shares have been issued.
Based on the information provided, HMRC will provide an opinion as to whether it would 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 on the basis a company provides its compliance statement.
HMRC will not routinely provide an opinion on whether a company is knowledge-intensive company. A company’s knowledge-intensive status will be considered only where the proposed investment would otherwise breach the rules for a qualifying company or the company provides details of the investors who would otherwise breach the EIS £1 million annual investment limit.
The rules of confidentiality apply. Requests will be dealt with only if they come from the company’s secretary or directors or a person authorised by them to negotiate with HMRC on their behalf. Potential investors making enquiries about a company must address those enquiries to the company itself.
An advance assurance is given in respect of a particular issue of shares. An assurance given in respect of one share issue should not be regarded as providing assurance in respect of a different share issue.
Where HMRC provides an assurance this is given only 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. Additional conditions apply to investors, which investors must be certain they meet before making a claim to tax relief.
The advance assurance service is not a registration service: it is offered to companies that are certainly seeking funding under one or more of the tax-advantaged schemes. We will not provide an advance assurance on speculative applications (see VCM14045).
HMRC may decline to provide an advance assurance in certain circumstances, see VCM14060 for more details.
Companies wishing to make an advance assurance should complete the form SEIS/EIS(AA) available on the HMRC website at https://www.gov.uk/government/publications/enterprise-investment-scheme-advance-assurance-application-eisseisaa. Companies should follow the guidance in VCM14040 to ensure all the relevant information is supplied. To assist with processing applications it is helpful if the company provides a contact telephone number in case it is necessary to discuss the application.
The advance assurance form mentions that the company must be able to complete the declaration on form EIS1 when shares are issued. Form EIS1 is also on the website - see VCM14080.