How to apply for EIS Advance Assurance? This is a question that many entrepreneurs and startups regularly ask themselves when looking for investors for their companies, especially if they are taking their first steps in the corporate world.
We must remember that in the modern-day, many startups need the support of investors to get off to a strong start and establish a bright future with investment schemes such as EIS. For this to be possible it is necessary to obtain an EIS Advance Assurance.
What is EIS Advance Assurance?
Obtaining an Advance Assurance is not easy and only those companies that meet certain requirements can benefit from the EIS investment scheme. However, before we talk about how to apply for Advance Assurance, it is important to understand what Advance Assurance is and its importance for some companies.
According to the Gov UK, EIS Advance Assurance can be considered as a certificate validated by HM Revenue and Customs or better known as HMRC. With this interim document, eligible companies can benefit from the tax relief of the EIS investment scheme and at the same time incentivize support from potential investors.
The EIS Advance Assurance HMRC was developed for the sole purpose of reassuring investors when investing in start-up companies. With this document, investors are assured their investments are safe in companies that are eligible for the EIS.
On the other hand, this document must be processed before applying for the EIS investment scheme. Any company wishing to benefit from the advantages of the EIS must apply for and comply with the requirements of the EIS Advance Assurance form.
How to apply for Advance Assurance?
Now that you know the meaning of an advance guarantee and its importance, you should be aware that this document is not a legal requirement for companies wishing to apply for the Enterprise Investment Scheme (EIS).
However, for almost any business or entrepreneur seeking investor support, it is necessary to apply for the EIS Advance Assurance HMRC as many investors use this document to ensure that they are investing in a responsible and EIS-eligible business.
This document can be very valuable for entrepreneurs or startups that are interested in support from foreign investors. Following an update in 2019, companies must comply with certain requirements when applying for the advance guarantee.
- Firstly, companies must submit a covering letter setting out their reasons for applying for EIS Advance Assurance. Furthermore, the cover letter not only serves to convince HMRC to obtain Advance Assurance but is also an efficient resource for applying for the Enterprise Investment Scheme (EIS) in the future.
- An EIS Advance Assurance form must then be completed with important information relevant to the company, such as financial details, home address, the industry in which the company operates, and much more. Providing this kind of information is of utmost importance as it must match the information required when applying for the Enterprise Investment Scheme (EIS).
- After completing the EIS Advance Assurance form, the application must be accompanied by some documents and copies showing a reference of the company’s fiscal, logistical and financial operations.
- Finally, all companies wishing to apply for EIS Advance Assurance HMRC must also give details of the amount they wish to raise from investors, as well as providing information on the activities and areas that will benefit from the investments.
If you want to be successful in submitting your application, do not hesitate to contact us, as we can provide you with advice and help you through the whole process.
How long does it take to obtain an Advance Assurance?
This is a question that many people ask themselves, especially those companies or entrepreneurs who are taking their first steps. However, there is no specific period to which companies are subject. The turnaround time may vary according to the type of company and whether the form was properly completed.
HM Revenue and Customs (HMRC) generally take approximately 4 to 6 weeks to respond after the application has been submitted with all the necessary documents and requirements.
As a general rule, when HM Revenue and Customs take more than 4 weeks to respond to an Advance Assurance application, it is because they want clarification from the company on the application and information submitted. For this reason, it is recommended that you apply well in advance of speaking to investors, especially if they are foreign investors.
How to increase the chances of obtaining EIS Advance Assurance?
There are a few tips you can apply if you want to increase your chances of success in completing the EIS Advance Assurance form and submitting the application. In this way, it is possible to obtain Advance Assurance in 4 weeks.
- Provide detailed information: It is essential to have a good business plan and to provide detailed information about the company.
- Provide valuable information: It is ideal to present additional documents such as agreements with investors, information from the company’s directors, shareholder information, memoranda, or articles related to the company.
If the application form and requirements are properly submitted and accompanied by certain additional documents, the chances of success in obtaining Advance Assurance can be increased.
Mistakes to avoid
There are certain factors to avoid if you do not want Advance Assurance to be delayed or HMRC to reject your application.
- It provides detailed information on the company’s financial movements. Failure to do so may cause HMRC to become suspicious of the company and its tax and financial operations.
- Failure to comply with EIS rules. If the company does not have the correct structure in place to comply with the rules required to properly use the EIS, HMRC may delay or cancel the Advance Assurance application.
- Not taking enough time to develop an excellent business and structural plan within the company. Lack of dedication to putting together a good business plan and anxiety about rushing through the paperwork can be counterproductive when it comes to obtaining Advance Assurance.
To avoid this kind of mistake and to succeed in obtaining the EIS Advance Assurance, do not hesitate to consult with us. You can benefit from the advice of the best advisors regarding EIS applications and rules.
Image source: Designed by vectorjuice / Freepik