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HMRC internal manual

Venture Capital Schemes Manual

Venture Capital Schemes Manual: venture capital schemes: the Enterprise Investment Scheme: advance assurance requests:: information needed

In order to give an assurance, HMRC must be satisfied that the company meets the conditions set out in VCM60020.

The company must also give undertakings about its future intentions, such as to issue eligible shares and carry out the qualifying business activity.

The company must disclose all the relevant facts that might affect the company’s eligibility under the scheme. It must provide all the information required in the advance assurance application form VCSAA v1.1 and checklist, and provide supporting documents as required. The checklist enables the company to explain to the VCR Team where all the relevant information and supporting evidence can be found, and to highlight areas of doubt. The relevant information must be fully signposted in the checklist; in order to manage demand for the advance assurance service, the VCRT officer will not spend time identifying relevant information from the documents provided.

HMRC will not consider giving an assurance unless the information supplied includes all of the following:

  • The Company Registration Number (CRN) and the company’s Unique Taxpayer Reference (UTR)
  • a completed checklist
  • a copy of the register of members at the date of submission of the advance assurance application
  • the names and company registration numbers of all subsidiary companies and a group structure diagram
  • an up-to-date copy of the Memorandum and Articles of Association of the company, and of all subsidiary companies, and details of any changes to be made
  • a copy of the latest available accounts of the company, and of all subsidiary companies; if the company has not yet drawn up a set of accounts, HMRC does not expect it to do so for this purpose; in that case, the latest management accounts should be provided
  • the company’s business plan including financial forecasts (see below)
  • 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, and how
  • a schedule of all EIS, SEIS, SITR, VCT or other risk finance State aid investments received by the company and its subsidiaries, including the amount, date and scheme under which each investment was received.
  • details of any subscription agreement or other side agreement to be entered into by the shareholders
  • details of the amount the company hopes to raise, and a schedule of the activities, and amounts, on which it (or its subsidiary) intends to use the money; the amount does not need to be precise but should be close to the actual amount needed and not state rough figures such as ‘up to £1 million’
  • confirmation that the company expects to be able to complete the declaration on form VCSEIS1 in due course
  • details of the potential investors or, if the company is using an intermediary to provide investors, details of the fund managers or other business promoters who are expected to provide these investors(see VCM60130):
  • the latest draft of any prospectus, information memorandum, brochure or similar document relating to the relevant fund raising or offer to be issued to potential investors
  • any other relevant information, for example documents to support a company’s view that it is a knowledge-intensive company, see VCM8161+
  • any point of doubt with an explanation as to why it believes the requirement is met.

Companies should ensure that they are aware of all the qualifying conditions of the scheme and provide any further information they think may be necessary to allow the officer to consider whether all the requirements are likely to be met. For instance, details of minority holdings in other companies, and 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).

Any assurance supplied to a company is given only on the basis of the information provided, see VCM60050. HMRC carries out a risk assessment of each application. It is the company’s responsibility to ensure it meets the scheme rules and to provide statements and evidence supporting its view that the company is eligible to receive investment under the scheme. HMRC will highlight any obvious errors or potential failures; otherwise HMRC will generally accept what is said in the application. Unless a company’s assertions unless it has identified particular conditions that may be in doubt.

An advance assurance based on limited disclosure will not be valid, and investors cannot rely upon such an advance assurance when deciding whether to invest in a company. An investment reliant on an advance assurance based on inadequate disclosure cannot assume to being a qualifying investment. Any compliance statement submitted on this basis may be rejected or, if later, any tax relief given could be withdrawn.

Where a company flags an area of doubt the HMRC officer may ask further questions, or decline to provide an opinion if the information supplied is not sufficient to form an opinion.

Business plans

All companies seeking a relevant investment must have a business plan. This should not be a new document produced for advance assurance, but one that has already been provided or is to be made available to potential independent investors as part of any company’s normal commercial arrangements for seeking investment from the market. The business plan is a key document to persuade independent investors to invest in the company and should contain the same level of 

detail as any potential market investor or lender, for example a bank, would expect to see. Guidance on producing a business plan, and the matters to be covered, can be found on

The level of detail will vary depending on the size of the company, its development stage and the amount of investment the company is seeking. The larger the company and/or the investment, the greater the detail that will be required for example in terms of turnover and profit forecasts. All business plans should explain how the money is to be spent, including the relevant business activity, and give details of any follow-on funding that is likely to be needed.

Where the relevant investment is follow-on funding of an earlier relevant investment the business plan should also refer back to the earlier business plan and explain how the previous investment was used.

The business plan should also explain how the investment will lead to the company’s growth and development in terms of, for example, increased turnover or employees.