How Long Does Advance Assurance Last?
For startups and early-stage businesses in the UK, securing investment is a critical hurdle. The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are powerful government initiatives designed to make this process easier by offering attractive tax reliefs to investors. However, to leverage these schemes effectively, a key step for many companies is obtaining Advance Assurance from HMRC. This raises a common and crucial question for founders: how long does this assurance last?
The simple answer is that Advance Assurance from HMRC does not have a fixed expiry date. However, this doesn't mean it's a "set it and forget it" certificate. The continued validity of your Advance Assurance is contingent on your company continuing to meet the specific eligibility criteria of the scheme for which it was granted.
Think of it less like a passport with a hard-and-fast expiration and more like a driver's license that remains valid as long as you adhere to the rules of the road. If your company's circumstances change, your Advance Assurance can become invalid.
Key Factors That Invalidate Advance Assurance
Several key changes can impact the validity of your Advance Assurance. It is crucial for founders to remain aware of these to ensure they can still offer tax relief to their investors.
Changes in Trading Activity: The nature of your business is a fundamental aspect of your SEIS or EIS eligibility. If your company pivots to a non-qualifying trade, such as certain financial services, property development, or legal and accounting services, your Advance Assurance will no longer be valid.
Exceeding Age and Asset Limits: Both SEIS and EIS have strict rules regarding the age and size of the company.
For SEIS, your company must have been trading for less than three years at the time the shares are issued.
For EIS, the limit is generally seven years.
There are exceptions for "Knowledge-Intensive Companies" (KICs), which can extend the trading window. If your company surpasses these age limits or exceeds the gross asset thresholds (£350,000 for SEIS immediately before the share issue and £15 million before and £16 million after for EIS), your Advance Assurance will be void.
Changes to Your Business Plan: The business plan you submit as part of your Advance Assurance application is a declaration of your company's objectives and how you intend to use the investment to grow and develop. Significant deviations from this plan could be questioned by HMRC and potentially invalidate the assurance.
The Role of Upstack Tax in Navigating Your Funding Journey
Understanding the nuances of SEIS and EIS, and the longevity of your Advance Assurance, can be a complex and time-consuming process for founders. This is where expert guidance becomes invaluable.
At Upstack Tax, we specialise in helping startups and early-stage businesses navigate the intricacies of government funding schemes. Our services are designed to ensure you not only successfully obtain Advance Assurance but also maintain your eligibility throughout your funding journey. We can assist with:
SEIS/EIS Application and Compliance: We guide you through the entire Advance Assurance application process, ensuring all information is accurate and presented in the format HMRC prefers. We also help you understand the ongoing compliance requirements to ensure your assurance remains valid.
R&D Tax Credits: For innovative companies, we can help you identify and claim valuable R&D tax credits, which can be a significant source of non-dilutive funding alongside your equity investment.
EMI Option Schemes: To help you attract and retain top talent, we can assist in setting up tax-efficient Enterprise Management Incentive (EMI) share option schemes.
By partnering with Upstack Tax, you can approach your fundraising with confidence, knowing that your SEIS/EIS Advance Assurance is secure and that you are maximising the benefits of all available government incentives. This allows you to focus on what you do best: building and growing your business.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. SEIS and EIS eligibility, tax reliefs, and compliance requirements are subject to HMRC regulations and may change. Investors and businesses should seek independent professional advice before making any financial or investment decisions.