Getting Advance Assurance for Venture Capital Schemes

Advance assurance is a service from HMRC that lets you confirm in advance whether your company is likely to qualify for venture capital tax relief schemes. This gives potential investors confidence before they commit their money, making it easier to raise investment for your growing business.

What is advance assurance?

Advance assurance is HMRC's way of confirming that a proposed investment in your company would meet the conditions of a venture capital scheme. You can show this confirmation to potential investors to demonstrate that their investment should qualify for tax relief.

It's important to understand what advance assurance doesn't cover: it only confirms whether your company meets the scheme conditions, not whether individual investors qualify for relief. Investors should still conduct their own due diligence before investing.

Which schemes can you apply for?

You can apply for advance assurance for three venture capital schemes:

• Enterprise Investment Scheme (EIS) – for established small and growing companies
• Seed Enterprise Investment Scheme (SEIS) – for very early-stage companies
• Venture Capital Trust (VCT) – for companies seeking investment from approved venture capital trusts

Note that Social Investment Tax Relief (SITR) no longer accepts advance assurance applications, as the scheme only covers investments made on or before 5 April 2023.

You must make separate applications for each proposed investment you want advance assurance for.

Who can submit an application?

An application can be completed by:

• The company secretary
• A director
• A trustee (if the social enterprise is a charitable trust)
• An authorised agent

If you use an agent to apply on your behalf, they must include a signed letter dated within the last three months confirming your company's authorisation. This authorisation must be provided with every new application.

Information you'll need to provide

Documents required for all schemes

Your application must include:

• How much money you plan to raise
• Your business plan and financial forecasts
• A copy of your latest accounts (if available)
• Details of all companies that will use the investments
• Details of all trading activities and expected spending on each
• An up-to-date copy of your memorandum and articles of association, plus any expected changes
• A copy of your register of members from the date you apply
• The latest draft of any documents you use to explain your proposal to potential investors
• Details of any agreements between the company and shareholders or Venture Capital Trusts
• A signed letter from a director or trustee (if using an agent)
• Any other documents showing you qualify for the scheme

Additional requirements for EIS, SEIS and VCT

You must explain how your company meets the risk to capital condition. This is a requirement that ensures the investment carries genuine risk for investors.

For EIS and VCT applications, you must also explain how the money will be used for the growth and development of your company.

First-time applicants: investor information

If you haven't used these schemes before, you'll need to provide details of your potential investors. The specific requirements depend on how you're raising money:

For EIS or SEIS applications:

• If raising money directly from investors – provide the name and address of prospective investors
• If listed on the Alternative Investment Market (AIM) – no investor information needed
• If planning to list on AIM – provide the name and registration number of your nominated adviser
• If using a fund manager or business promoter – provide evidence they've agreed to work with you
• If using a crowdfunding platform – provide evidence they've accepted your proposal

For VCT applications:

You must provide both the names of the trusts planning to invest and the names of their fund managers.

Even if you've used the schemes before, you may still need to include investor details to demonstrate you meet the risk to capital condition.

How to apply

HMRC now offers a new online application form for all venture capital schemes. You'll need to sign in to use the service, or you can create sign-in details if you don't already have them.

The online form is available on the GOV.UK website.

After you apply

HMRC will contact you with their decision.

If advance assurance is granted

HMRC will send you a statement confirming the investment is likely to qualify. You can share this statement with your investors.

When you proceed with the investment, you must submit a compliance statement to actually use the scheme. In this statement, tell HMRC about any changes since your advance assurance application – otherwise the assurance will no longer apply.

Once approved, HMRC will give you permission to issue certificates to investors so they can claim tax relief. You don't need to raise the full amount stated in your application to do this.

If advance assurance is refused

HMRC will explain why they believe your application doesn't meet the scheme conditions.

If your application is incomplete or not considered, HMRC will not provide feedback.

Getting help

If you have questions about your application, you can email HMRC at: enterprise.centre@hmrc.gov.uk

Note that this team doesn't handle individual investor claims for Income Tax or Capital Gains Tax relief under these schemes, or claims for Shares Loss Relief. Those claims are handled by the tax office dealing with the investor's personal tax affairs.

Sources

• Apply for advance assurance on a venture capital scheme

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.