Changes To The EIS Advance Assurance Process

As of 13 March 2018:

• Increasingly, the process will be digitised.

• EIS Assurance Applications will be considered by HMRC where the information about a proposed investment is provided.

• This is a discretionary and non-statutory service. HMRC have no obligation to provide an opinion and may actually decline to do so.

• If a company is relying on a specific interpretation to support its application, it must provide a full technical analysis of the relevant laws and how its circumstances comply with that law.

• The publication announces that HMRC will now not provide assurance on speculative applications and will only provide an opinion where the application names the individuals, fund managers or other funders who are expected to make the investment. This is a new level of required detailed disclosure. HMRC does not expect investment offers to have been formalised, but it does expect the company to have approached potential investors and to be able to set out details of the investment that would be agreed on receipt of the EIS Advance Assurance.

• HMRC will apply new 'risk to capital anti-avoidance criteria' which starts on 6 April 2018. Any applications in respect of investments to be made after this date should set out evidence regarding the risk to capital that investors will be exposed to.

  HMRC will not provide an EIS Advance Assurance opinion if they conclude the investment is classed as capital preservation.

• HMRC are working to improve its written guidance, and this will include publishing a checklist of supporting documents that need to be submitted to HMRC as part of the EIS Advance Assurance submission.