Here are a few pointers to consider if you would like your company to attract more investors via this attractive tax relief and would like to understand more about the SEIS advance assurance process:
1. Give yourself enough time
HM Revenue & Customs (HMRC) are generally pretty good in turning around SEIS applications but on average a response from them can be up to 6 weeks, and 8 weeks around key tax deadlines e.g. 31 Jan self assessment tax return filing date and 5 April end of personal tax year.
2. Use the form that HMRC provide for you
This is called the online SEIS/EIS (AA) form. You may wish to accompany with a letter as there’s not much room to disclose any additional matters that might be relevant. Don’t forget, this is a tax clearance document and therefore HMRC will reserve the right to withdraw an approval if it later transpires that you didn’t disclose all of the facts.
3. The advance assurance application process is not mandatory but is well advised
For two principal reasons:
1. Most investors will insist on evidence HMRC approval for their own piece of mind before parting with their investment cheque and
2. It gets you onto HMRC’s radar for the second stage which is to complete and file forms SEIS1 / EIS1 which is necessary for the investors to be able to claim the tax relief (if you haven’t applied for advance assurance, HMRC generally ask all of the sorts of questions that would have been covered in the advance assurance application in any case).
4. If you foresee that you will be seeking to raise EIS money after a SEIS round then apply for both
Apply for both SEIS and EIS in a single advance assurance application so you don't have to reapply, it saves loads of time.
5. Take care if you are a software company
If you're a software company you be generating revenues from licence fee income (as most will), you will be relying on a carve-out from an otherwise non-qualifying ‘excluded activity’ – in receiving royalty or licence fee income – which states that you can qualify as a SEIS / EIS company if the whole, or greater part, of the underlying intellectual property that generates the revenues is created by your company.
If you’d like to find out more about SEIS advance assurance or other tax relief options available, take a look at our blog or get in contact us today.