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Category Archives for "SEIS / EIS"

You got SEIS / EIS Advance Assurance – Now What?

"SEIS" and "EIS" are very much buzzwords in the world of startups and funding right now. You may have already secured advance assurance from HMRC that your company qualifies under either or both schemes but then you start to wonder - what next...?

Here we share some practical pointers on what you as the Founder should consider as your next steps:

1. GET READY TO OFFER SHARES IN YOUR COMPANY TO INVESTORS

Understand your obligations to your investors. Take professional advice particularly in relation to your offer document and any shareholders agreement. It is fresh issues of shares only that qualify under SEIS & EIS. Also, remember your obligations extend for at least three years beyond the issue of the SEIS / EIS shares to your investors

2. DRAW UP A DETAILED SHARE CAPITAL TABLE (IN SPREADSHEET FORMAT)

No Founder can be without a detailed spreadsheet share cap table with each step mapped out from the Founder (subscriber) share issues and then for each round thereafter (SEIS, EIS and onwards). This allows the Founder to keep track of respective valuations, % shareholdings and to observe dilutions at each stage

3. SEIS FIRST, EIS AFTER (ALWAYS)

That order ONLY. So if you are planning on fundraising for both (and you have advance assurance for both) ensure that you allow at least ONE day to pass between the issue of the SEIS shares and the EIS shares thereafter

4. WATCH THE GROSS ASSETS LIMITS FOR SHARE SUBSCRIPTIONS

A ‘nice to have’ problem that many Founders would be envious of (!) but make sure that any share subscriptions from investors do not breach the ‘gross assets’ test at the time of the share issue. More likely to be a problem under SEIS with its lower £200k gross assets limit

5. DON’T LET ANY SEIS / EIS INVESTORS BREACH THE 30% LIMIT

This is where your nifty spreadsheet will come into play. Make sure that % shareholdings are shown and that no SEIS / EIS investors ever exceed 30%. Watch out for “associates” whose shareholdings will be aggregated e.g. spouses, parents, grand-parents, children, grand-children (brothers & sisters are okay)

We have a further 5 tips for Founders (so 10 in total) that we have pulled together into a handy one-pager PDF tip sheet. You can download it now via the link below

SEIS Briefing Paper

A few clients and contacts have asked us for a short briefing paper outlining the key points related to the Seed Enterprise Investment Scheme (SEIS).

Although not intended to be an exhaustive list of all of the relevant points, this SEIS one-pager summary of the key points may be useful for entrepreneurs and business angel investors alike.

Please let us know if you have any specific queries. We would be delighted to help.

How to apply for HMRC advance assurance for SEIS / EIS

Here is an updated short video on how to find HM Revenue & Customs’ designated form for applying for advance assurance that your company is a qualifying company for the purposes of raising funding under SEIS or EIS (or both).

You can find the HMRC form here.

Many companies prefer us to take care of the process for them from:

  • checking the proposed share allocations and share capital
  • reviewing the Articles and / or shareholders agreement for any potential issues
  • completing the advance assurance application form – EIS/SEIS(AA)
  • drafting an accompanying letter to the form EIS/SEIS(AA) where there are unusual factors or if we require clarification on potential points
  • tracking the application through HMRC
  • assisting management in the issue and timing of shares under SEIS / EIS
  • applying for tax certificates from HMRC (Forms SEIS1 / EIS1) in order that the investors can claim the tax reliefs

Let us know if we can help you.

SEIS – Need to know tips for startups

Here is a short screencast covering some high level need to know tips for startup founders on the Seed Enterprise Investment scheme (‘SEIS’).

A further point to note is that an investment under SEIS must be in return for a subscription for “full risk” shares – a loan does not qualify for SEIS relief.

Presented by Steve Livingston (MD –  IP Tax Solutions Ltd)