Advance assurance gives investors confidence that SEIS or EIS tax relief should apply.
It is not legally required, but most angel investors expect it before investing.
HMRC focuses on eligibility, risk to capital, and how the funds will be used.
Advance assurance under the venture capital scheme is HMRC’s confirmation that an investment in your company is likely to qualify for SEIS or EIS tax relief. For founders raising capital, it is one of the most important steps you can take before speaking seriously with investors.
While advance assurance is not a legal requirement, most angel investors will not proceed without it. It gives reassurance that the tax relief they expect should apply, provided nothing material changes before shares are issued.
If you are preparing for a fundraising round, securing advance assurance early can remove friction, shorten timelines, and significantly improve investor confidence.
What is advance assurance under the venture capital scheme?
Advance assurance is an opinion issued by HMRC stating that a proposed investment is likely to qualify under the UK’s venture capital schemes. In practice, this usually means the Seed Enterprise Investment Scheme or the Enterprise Investment Scheme.
It is based on the information you submit at the time of application, including your business activities, fundraising plans and supporting documents. While it is not legally binding, HMRC will usually stand by its decision if the final investment matches what was approved.
For early-stage companies, advance assurance acts as a credibility signal. It shows investors that HMRC has already reviewed your structure, trade and growth plans.
Why advance assurance matters when raising SEIS or EIS funding
SEIS and EIS exist to encourage investment into high-risk startups by offering generous tax reliefs. For many angels, those reliefs are essential rather than optional.
Without advance assurance, investors face uncertainty. If HMRC later refuses relief, investors may lose income tax relief, capital gains benefits or loss relief. As a result, many will not invest without assurance in place.
Advance assurance helps because it:
- Reduces perceived investor risk
- Speeds up due diligence
- Avoids last-minute deal changes
- Signals founder preparedness
Which venture capital schemes does advance assurance apply to?
Advance assurance applies to HMRC’s venture capital schemes, most commonly SEIS and EIS.
SEIS is aimed at very early-stage companies raising their first external funding. EIS applies to companies that are further along and have grown beyond SEIS limits.
If you are unsure which scheme applies, understanding the difference between SEIS and EIS early can prevent structural mistakes during fundraising.
Some companies apply for advance assurance covering both schemes at the same time, particularly if they expect to move from SEIS to EIS as they grow.
Who should apply for advance assurance, and when
Advance assurance is designed for founders planning to raise external investment under SEIS or EIS. It should be applied for once your plans are clear, but before serious investor outreach begins.
Most companies apply:
- One to two months before fundraising
- After preparing a pitch deck and forecast
- Once at least one potential investor is identified
HMRC requires evidence that your fundraising plans are genuine. Listing a prospective investor is mandatory, even if they are not yet committed.
What HMRC checks in an advance assurance application
HMRC focuses on whether your company meets the scheme rules and whether the investment represents genuine commercial risk.
They will typically review:
- Whether your trade qualifies
- Your trading start date and company age
- Gross assets and employee numbers
- How the investment will be used
- Whether the risk to capital condition is met
- Whether investors are connected
This is where many founders struggle. Weak explanations and inconsistent documents are common reasons for delay.
What information and documents you need to apply
An advance assurance application pulls together several core documents. Misalignment between them is one of the most common causes of rejection.
You will usually need:
- Company details and UTR
- Trading history and start date
- Details of previous SEIS or EIS funding
- A pitch deck or business plan
- A three-year financial forecast
- Details of at least one potential investor
- Articles of association and share register
If you are still refining your narrative, a startup business plan template can help keep your pitch deck and forecasts consistent.
How the advance assurance application process works
The process is detail-heavy but predictable.
- Confirm eligibility for SEIS or EIS
- Prepare and align documents
- Identify a potential investor
- Submit the application to HMRC
- Respond to follow-up questions
- Receive advance assurance
Delays usually occur when documents contradict each other or fail to explain how funds will be used.
How long advance assurance takes and how long it lasts
HMRC typically responds within 15 to 45 working days, although this can vary during busy periods.
Advance assurance does not have a fixed expiry date. However, it can effectively lapse if:
- Your business activities change
- Your share structure changes
- The use of funds changes materially
- Eligibility conditions are no longer met
Common reasons advance assurance applications fail
Most failures are avoidable. The most common issues include:
- Carrying out a non-qualifying trade
- Weak risk to capital explanations
- Inconsistent trading dates
- Share structures that breach scheme rules
- Ineligible use of funds
Reviewing SEIS and EIS 10 common pitfalls before applying can save weeks of delay.
Another frequent issue is company age. Checking the EIS investment time limit early ensures your company is still eligible before you invest time in the application.
How Sleek helps you secure SEIS and EIS advance assurance
Advance assurance is not just a form. It sits at the intersection of tax rules, company structure and fundraising strategy.
Sleek helps founders by reviewing eligibility, aligning documents, preparing risk explanations and managing HMRC correspondence so investors can proceed with confidence.
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Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
FAQs on advance assurance venture capital scheme
Is advance assurance legally required for SEIS or EIS?
No. It is not mandatory, but most investors expect it before investing. Without it, investors risk losing tax relief if HMRC later refuses the claim.
Can I apply for SEIS and EIS advance assurance at the same time?
Yes. HMRC allows applications to cover both schemes if your company may qualify for each.
Do I need an investor before applying?
Yes. You must list at least one potential investor, even if they are not yet committed.
Does advance assurance guarantee tax relief?
No. It is not legally binding, but HMRC usually honours it if nothing material changes.
How long does HMRC take to approve advance assurance?
Most applications are processed within 15 to 45 working days, depending on complexity and demand.
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What happens after advance assurance is granted?
You can proceed with fundraising. After issuing shares, you must submit compliance statements so investors can claim their relief.
Can advance assurance be withdrawn?
Yes. If eligibility conditions change or information becomes inaccurate, HMRC may no longer stand by the assurance.
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