EIS: income tax relief: company and investor procedures: advance assurance requests: information needed
In order to give an assurance the HMRC officer will need to be satisfied that:
- the company can be expected to be a qualifying company (see VCM13010),
- the shares to be issued will be eligible shares (see VCM12020),
- the shares are to be issued to raise money for a qualifying business activity (see VCM12110),
- the money raised is to be employed only by companies that satisfy the rules of the scheme (see VCM12050).
When making its request for an assurance the company may supply primary facts or broad statements (such as, ‘the shares to be issued will be eligible shares’). However, no assurance is given unless the information supplied includes all the following:
- a copy of the latest available accounts of the company, and of any subsidiary company. If the company has not yet drawn up a set of accounts, HMRC does not expect it to do so for this purpose,
- the company’s business plan
- details of all trading or other activities to be carried on by the company and any subsidiary, and a note of which company or companies will use the money raised,
- details of the approximate sum the company hopes to raise, and how it will be used,
- confirmation that the company expects to be able to complete the declaration on form EIS1 in due course,
- a copy of the latest draft of any prospectus, information memorandum or similar document to be issued to potential investors. Where the company intends to seek investment from an EIS or SEIS Fund, an EIS or SEIS discretionary portfolio arrangement or a VCT, the name of the Fund / Arrangement and of the firm responsible for it, or of the VCT in question. In such cases HMRC may also ask to see any prospectus, information memorandum or brochure relating to the relevant fund raising or offer,
- an up-to-date copy of the Memorandum and Articles of Association of the company and of any subsidiary, and details of any changes to be made,
- details of any subscription agreement or other side agreement to be entered into by the shareholders,
- details of the potential investors or the fund manager(s) or other promoter(s) who are expected to provide these investors.
HMRC would advise companies to ensure that they are aware of all of the qualifying conditions of the scheme and to provide any further information they think may be necessary to allow the inspector to consider whether all the requirements are likely to be met. For instance, details of minority holdings in other companies, or details of other companies’ minority holdings in the issuing company, may be relevant in determining whether the ‘control and independence’ requirements will be met - see VCM13100.