VCM60220 - Venture Capital Schemes Manual: venture capital schemes: the Seed Enterprise Investment Scheme: advance assurance requests: information needed
In order to give an assurance HMRC must be satisfied that the company meet 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 SEIS 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 without the completed SEIS Checklist with your advance assurance application.
Any assurance supplied to a company is given only on the basis of the information provided, see VCM60050. HMRC does not generally check the accuracy or completeness of the information. It is the company’s responsibility to ensure it meets the scheme rules and provides 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 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 be assumed to being a qualifying investment. If HMRC subsequently finds that a company was not eligible for investment because the company had not made a full disclosure of relevant information then any compliance statement will be rejected or, if later, any tax relief given will be withdrawn.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.
All companies seeking a relevant investment must have a business plan. This should 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 gov.uk.
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.
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.