Most of our investors and entrepreneurs are aware of the governments SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme), which has helped to stimulate investment in UK start-ups. As part of the process, companies need to submit an application to HMRC outlining the nature of the company and business plan to qualify for advanced assurance as part of the scheme.
Due to the high level of companies that have received advanced assurance but have not gone on to raise funds, the government has recently introduced some important changes to the process of advanced assurance in order to reduce workload and expedite approvals. Now, every application must include the names of proposed investors intending to invest in the business. Failure to do so will deem the applicant too speculative to be eligible for investment.
For investors, this does not mean that should you show an intent to invest and be named as an applicant that you are committing to invest. For startups this change can prove to be a difficult catch-22 as you are more likely to attract the interest of investors with advanced assurance. Our advice is to have your business plan ready so that should you garner interest through your own network or events like ours, you can have your application processed quickly while you are undertaking negotiations and due diligence. There are also a range of firms, including S100 partners that can help you with this process for a small fee.
For more information, please check out the HMRC website at: https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm14030