Rules and ethics
After advance assurance: the compliance statement and certificates
What a UK startup funding round still has to do after advance assurance: issue the shares, file the compliance statement and pass certificates to investors.
What to take away
- Advance assurance records HMRC's view before the share issue; investors can claim relief only after the compliance statement is accepted.
- The company files the compliance statementform EIS1 for EIS and form SEIS1 for SEIS.
- A new compliance statement is needed for each share issue.
- HMRC sends a letter of authorisation, a unique reference number and a compliance certificate (form EIS3 or SEIS3), which the company passes to investors.
- The scheme rules must be followed for at least three years, or relief is withdrawn from investors.
Advance assurance is a view, not a relief
Advance assurance answers one question before the raise: is this share issue likely to qualify? It releases no relief to anyone. To let investors claim, the company must first submit a compliance statement to HMRC for the shares issued, and every investor's claim waits for it.
Advance assurance is not compulsory, but angel syndicates and many equity platforms still ask for it before releasing funds. A founder who skips it carries the risk alone: if the issue later fails to qualify, investors lose the relief they expected.
For SEIS, the company must first submit a compliance statement (form SEIS1) to HMRC for the shares issued, and SEIS has its own limits. SEIS vs EIS explains which scheme fits a round before any paperwork goes out. The conditions sit in the Income Tax Act 2007, in Part 5 for EIS and Part 5A for SEIS.
The steps after the share issue
The steps run from the issue day to the investor's claim, and each depends on the one before. A slip early delays every investor at once, so give each step a named owner in the round tracker.
- Hold a board meeting, issue the shares for cash and update the register of members.
- For EIS, wait until the company has carried out its qualifying business activity for four months, because the statement cannot be submitted earlier.
- Complete the compliance statement, form EIS1 or SEIS1, and attach copies of any documents that changed since advance assurance.
- Send it to HMRC. Each share issue needs its own statement.
- When HMRC agrees, it sends a letter of authorisation, a unique reference number and a compliance certificate (form EIS3 or SEIS3).
- Give each investor the certificate, using the unique investment reference number on it.
- Investors claim through self assessment or by amending a return.
For EIS, the statement must be submitted within 2 years, or within 2 years of the end of the tax year in which the shares were issued, whichever is later. Put that date in the tracker on the day the shares are issued.
SEIS has a different readiness test. The company can submit its statement only once it has carried out the new qualifying trade for at least 4 months or spent at least 70% of the amount raised by the share issue.
Who holds what at each stage
| Stage | Who acts | What it unlocks |
|---|---|---|
| Advance assurance | Company and HMRC | A view that the issue is likely to qualify |
| Share issue | Board | Shares that exist and a register to update |
| Compliance statement | Company secretary or an authorised agent | HMRC's review of the issue |
| Authorisation, reference number and certificate (EIS3 or SEIS3) | HMRC to the company | Certificates the company can give to investors |
| Investor claim | Each investor | Relief through self assessment or an amended return |
SEIS relief can be carried back to the previous tax year, which matters for shares issued early in a tax year. Check the claim route for each investor, because a certificate that reaches an investor late can leave the claim waiting.
What delays the claim
HMRC queries can arrive when the documents it saw at advance assurance no longer match the issue. Keep one version of each document and date every update you send. Three mismatches cause most of the avoidable waiting.
- A spending plan that no longer matches the business plan HMRC saw.
- A share class list that omits an instrument, such as convertible notes or non-voting shares.
- An update sent without a dated record of what changed.
Shares must be paid for in cash. An issue paid for in any other way can fail the qualifying conditions and cost investors their relief.
The delay has a price. A slower round is one of the stress tests a founder can run, and the delay and fallback costs belong in the budget before the round opens.
Keeping the conditions after the claim
Relief is not safe once the certificates are out. The company must follow the scheme rules for at least three years after the investment is made, or tax relief is withdrawn from investors. It must tell HMRC within 60 days if it no longer meets the conditions.
Record the end of that period beside the issue date. The wider founder-side duties sit in the rules and ethics checklist, and a breach found late is harder to fix than one found at the time.
Before you act
- Name an owner for each step from share issue to investor claim.
- Put the compliance statement deadline in the tracker on the issue day.
- Attach copies of any documents that changed since advance assurance.
- Pass each certificate to its investor with the unique reference number.
- Note the end of the three-year rule period and the 60-day notice duty.
Common questions
Can we issue shares before HMRC replies to the advance assurance application?
Yes, the law allows it. If the issue later fails to qualify, investors lose the relief they expected, so many founders wait for the response.
Does advance assurance guarantee tax relief?
No. It records HMRC's view on the facts supplied. HMRC checks the position again when the compliance statement is filed, and the outcome can change if the spending plan changes.
Who sends the compliance statement?
The company does, through its company secretary or an authorised agent. Investors cannot claim until HMRC has agreed the statement for the shares issued.
