Knowledge Base: SEIS/EIS Advance Assurance - Trading date & eligibility

This guide outlines key points about SEIS and EIS eligibility, particularly:

• How HMRC determines the start of trading

• How minimal or experimental revenue is treated

• Whether and when to apply for Advance Assurance (AA)

• Distinctions between SEIS and EIS rules related to trading dates

Understanding the SEIS start of trading date

What “trading” means under SEIS

For the Seed Enterprise Investment Scheme (SEIS), HMRC considers trading to have begun when the company first makes goods or services available for sale.

Importantly, actual revenue is not required.

Trading begins at the point where:

• The business is genuinely open for sales, or

• The company is actively attempting to generate income from its product or service.

In example:

Even if no one buys anything for months, trading has commenced once the company is open to receiving revenue.

How minimal or experimental revenue is treated

Companies often run:

• Market-testing exercises

• Pilot product sales

• Early GTM (go-to-market) experiments

• Small sample sales

Any attempt to sell - even generating very small revenue - can count as trading for SEIS purposes.

This includes:

• De minimis sales

• Test-market transactions

• Non-recurring or experimental income

• Undertaking a single day consultancy via the startup, even if this isn't directly related to the planned trade of the startup in due course.

Once trading has begun, it triggers the SEIS rule that the company must have been trading for less than 3 years at the time of investment.

Key difference between SEIS and EIS trading date rules

SEIS: strict interpretation

• SEIS treats any attempt to sell as the start of trading. There is no exemption for “limited market testing.”

EIS: more flexible

• For the Enterprise Investment Scheme (EIS), HMRC guidance allows companies in some cases to ignore very limited sales made purely to test the market.

• This distinction applies to EIS only - not SEIS.

• This is referenced in VCM8151.

Company age vs trading age

A common misunderstanding is that a company must be less than three years old to qualify for SEIS.

The correct rule:

• SEIS eligibility depends on years of trading, not years since incorporation.

Example: A company incorporated in 2015 is still eligible for SEIS in 2025 if it has not yet started trading.

Advance Assurance (AA) - when to apply and why

Purpose of AA

Advance Assurance provides written confirmation from HMRC that a company is likely to qualify for SEIS/EIS based on the information supplied.

While not legally required, AA is important because:

• Many investors will not commit funds without it.

• It reduces investor risk.

• It provides clarity in situations where trading dates or eligibility might be ambiguous.

Applying only for EIS (not SEIS)

If a company is not SEIS-eligible (e.g., trading started too long ago), it can still seek AA purely for EIS. AA gives investor confidence regardless of the SEIS outcome.

Trading date in the AA application process vs AA compliance

During the Advance Assurance application, HMRC may ask for a start of trading date, but:

• You can answer “Not trading yet” if correct.

• HMRC will not challenge or confirm the date at this stage.

During the SEIS1/EIS1 compliance process is when the trading date becomes formally assessed and used to determine eligibility.

Practical Takeaways

• SEIS trading date starts when you start to trade (ie offer sales), not when revenue arrives.

• Even micro-revenues from GTM experiments will start the 3-year SEIS clock.

• EIS has more flexible treatment of “limited market-testing sales.”

• AA is mainly to reassure investors.

• Company age ≠ trading age. You can incorporate long before you begin trading.