SEIS and/or EIS advance assurance is key to closing your funding round. Two key legal documents must be submitted with your application. The great news is FounderCatalyst's advance assurance package is included within your legal funding round, at no extra cost.
SEIS and EIS are generous tax relief incentive schemes, offered by the UK Government to investors resident within the UK. They were set up by the Government to encourage investment into start-ups and early stage businesses.
SEIS stands for Seed Enterprise Investment Scheme and is aimed at very early stage businesses. SEIS tax relief is more generous than EIS, to reflect that the investment is early stage with a higher risk. Businesses can receive a maximum of £150,000 through SEIS investments.
EIS stands for Enterprise Investment Scheme, is aimed at slightly later stage businesses and the tax relief is slightly less generous...but still great! Under EIS, you can raise up to £5 million each year up to a maximum of £12 million in your business' lifetime.
Produce your pitch deck and 3 year forecast.
Sign up for your FounderCatalyst account and create your SEIS / EIS paperwork.
Submit to the FounderCatalyst experienced checking service.
E-mail your submission pack to HMRC.
A company can apply for both SEIS and EIS schemes, if appropriate, at the same time. There is a good summary of SEIS and EIS and more detailed information available from HMRC - you should read this if you are serious about attracting investors under these tax relief schemes.
Ordinarily, for investors to be able to invest under the SEIS or EIS schemes, your company needs to have advance assurance from HMRC. Essentially, you ask HMRC to agree that any investment in your company meets the conditions of the SEIS / EIS tax relief scheme(s). You then use advance assurance to “assure” investors that their proposed investment qualifies for the tax relief scheme, based on the information you provided to HMRC.
Put simply, by having advance assurance you become a more attractive proposition to investors, dramatically improving your likelihood of a successful fundraise. Advance assurance makes you a lower risk investment and therefore more appealing, all due to the tax relief your investors can claim.
It's all about tax relief and reducing risk. For EIS and SEIS, investors can get income tax relief of 30% and 50% respectively on money invested, and capital gain exemption on a sale of the company.
We are not going to pretend that advance assurance is always a given. That is why the FounderCatalyst advance assurance package is proven to give you a great chance of submitting a successful application. The FounderCatalyst platform provides extensive documentation, including all of the necessary forms and a covering letter to HMRC, together with all of the required legal documents.
FounderCatalyst will help to prepare your (S)EIS HMRC application for advance assurance. We will review your pitch deck and forecast to give you a great chance of passing.
Once you have completed your advance assurance documentation using the platform, submit your submission pack to [email protected]. We will review and inform you, on a non-advisory basis, if we think any documents or information is missing and offer suggestions on how to improve your application to HMRC. We aim to respond to you within 24 hours and our checking service has a 98% success rate.
The great news is FounderCatalyst's advance assurance package is included within your legal funding round as standard, at no extra cost (so, £1,495 exc. VAT). Most advisors will charge significantly more than this just to produce your funding round legal paperwork, so it really does save you time and money.
We prefer to be open and transparent, saving you time and money.
“FounderCatalyst have been excellent in supporting us with our first round of fundraising. The specialist knowledge of the team is exceptional, and the customer service is second to none. It has made what can normally be a painful process, simple. I would highly recommend to any fellow founders.”
Olly Rodriguez-Ballinger - YesRef
Founder and CEO
As part of your advance assurance application, you must submit copies of your articles of association together with your subscription and shareholders agreement. Much of the information required to compete your legal documents is also required by HMRC during an advance assurance application. Therefore, your advance assurance application and legal paperwork need be to be completed at the same time.
So, rather than start by paying for your advance assurance separately and then having to pay for your legal paperwork on top, with FounderCatalyst the advance assurance package is included in your legal funding round price.
SEIS / EIS is key to getting your investors onboard.
As with any HMRC scheme, there are many catches when applying for advance assurance. As you would expect, there is a lot more to do than just complete and submit a form.
When you apply for advance assurance, you will need to submit several supporting forms and documents to HMRC as detailed below.
Some key pitfalls to avoid:
If you fail to provide all of the requested information, it will at best lengthen the process and at worst result in your application being rejected.
As a best case, we have had a positive confirmation of advance assurance from HMRC within just 2 working days. HMRC ominously warns, however, that:
We aim to deal with 80% of correspondence within 15 working days of receipt. We aim to deal with 95% of correspondence within 40 working days of receipt.All enquiries are dealt with strictly on a date received basis. We will not reply to emails requesting an update for an enquiry that has been received and is currently within the 15 working day timeframe. And during Coronavirus this ‘don't chase' timeframe was extended to 45 days.
In short, apply for advance assurance as soon as possible to ensure that it doesn't delay closing your round.
An SEIS (and/or) EIS submission consists of documents that fall into four broad categories:
Our toolkit walks you through how to find find your supporting documentation and complete the HMRC forms.
You can, but you need to be careful with timings to ensure that all SEIS investors complete their investment before the EIS investments start. In practice, this means: you must ensure that all of your SEIS investors pay for their shares and that you issue their share certificates, wait at least one day and then accept payment from EIS investors and issue their share certificates. Failure to follow this guidance could lead to either SEIS or EIS status being withdrawn from your company, so you should communicate these timings to your investors.