How long does it take to get EIS Advance Assurance?

One of the most common questions we get asked by clients when advising them on the applications for EIS and SEIS clearance is “How long will it take?”. In this article, by looking at HMRC data on application processing times, we seek to provide businesses with clarity on the time that should be allowed when preparing for and submitting their EIS Advance Assurance Requests (AARs), and our advice on the application process to reduce unnecessary delays.

We look at the fluctuations in HMRC response times from the point of making an application. The data, which HMRC provided to Price Bailey in April 2020 covers the financial years from 2015 to 2019. It shows that the processing speed has improved over time, however over 50% of applications can still take more than 30 days to resolve.

At the time of writing, COVID-19 is a major concern for many businesses. Equity fundraising attempts will no doubt increase, and the tax advantages of EIS will be increasingly important as funds and angels look to mitigate some of their risks. Our advice, given these numbers, is that business leaders must take advice on EIS early; the rules have become increasingly detailed and Advance Assurance acceptance in the past is frequently not an indicator of acceptance in the future.

A graph to show the processing times of EIS applications from the day HMRC first register the application until the ultimate point of acceptance/rejection.

From our own experience, we have seen many AARs succeed very quickly. However, there is no doubt that some of the 53% of applications (2018-19) taking more than 30 days are as a direct result of issues such as:

  1. Founders being poorly advised and the applications missing key detail and understanding of what HMRC expect to see and how they appraise AARs.
  2. Additional complexity in deal structures – in particular, driven by the emerging divisions between EIS focussed institutional investors and incumbent or new angel investors.
  3. The misunderstanding of risk to capital conditions – we explain this further below.

When we look at processing speeds across the year by the number of AARs processed to conclusion each quarter over the last three years, we noted a significant speed-up in the time taken in Q3, before prolonging beyond 30 days again in Q4, coming to the end of the tax year, despite the number of applications in each quarter remaining relatively consistent. This surprised us, as sometimes our experience has been contrary to this, but, having the data gives a much more holistic picture. Some of the patterns that can be observed may be as a consequence of increased demand from companies hoping to attract EIS investors before the end of the tax year, or as a result of other key tax deadlines.

Risk to capital conditions

The introduction of the risk to capital conditions, without comprehensive guidance on how they would be applied, has meant business and advisers are experiencing difficulty in understanding how strict these rules are. The ‘risk to capital ’ rules means that entrepreneurs must demonstrate to HMRC and investors that there is a “significant risk” of a capital loss on their shares exceeding the “net investment return”. The added complexity of the application process, and the increased likelihood of applications being rejected, has pushed up the cost of raising venture capital via EIS/SEIS by well over half. The cost of professional fees for the process has consequently risen significantly, which a start-up business can ill afford. The introduction of the rules was as a consequence of HMRC’s concern that too many EIS investments were being made with capital preservation in mind when the EIS tax reliefs aimed to incentivise investment into risk assets.

For more information on the risk to capital conditions, you can access our press release on the surge in EIS/SEIS applications being rejected by HMRC driving up cost of raising capital.

Our advice to businesses seeking to apply for Advance Assurance

While it is not mandatory to see Advance Assurance before submitting an EIS Compliance statement on completion of funding, it is highly recommended for two reasons.

1) Because by the quantum of information which must be submitted together with an EIS compliance statement, once investments have been made and shares issued, is significantly reduced

2) Many sophisticated investors are unlikely to invest without such assurance already in place.

  • Ensure you meet the requirements – It sounds obvious, but, we have experienced several business leaders who believe that they should qualify simply based on being an early-stage business. There are several requirements and tests that a company must meet to be eligible for EIS. Some of the requirements are relatively straight forward, such as sector and age of the business. However, the interpretation of the requirements can be a time-consuming process depending on the specific circumstances of both the business and its existing ownership structure. It is much better to invest that time early on, and we advise that you seek assistance from a tax adviser who can support in understanding whether you meet the requirements.
  • This isn’t a box-ticking exercise; have the value creation strategy and investment thesis to support your application – one of the AAR requirements is that you can demonstrate how the investment will be used for growth and development. Therefore, ensuring that you have allowed adequate time to develop a robust growth strategy that clearly demonstrates what you will be doing and how value will be created in the business (ideally for 3-5 year, and detailed for the first 1-2 years), backed up by market data is paramount. You should be doing this anyway as investors will expect it when conducting their own due diligence! Find out more about developing your value creation strategy.
  • Have the investors ready – up until a few years ago; you would be able to make an EIS AA application in advance of raising funds. Unfortunately, that resulted in a large number of businesses applying for assurance on a ‘just in case’ basis which put significant weight on HMRC resources and increased the length of time in processing applications. Consequently, HMRC now requires that you can provide details of at least one of the investors that will be seeking EIS relief in your existing funding round and provide details of an ‘agent,’ e.g. an adviser who’s primary engagement is to support in raising investment. It can feel like putting the cart before the horse. Still, those businesses that have taken sufficient time to go through the planning process have a credible investment thesis and can identify the best investors for their proposition are more likely to receive early interest from investors anyway.
  • Incorporate your EIS AA application into your strategic planning – timing with this, as you can see from the data above, can be everything. Begin the application too soon, and you may not have identified and attracted the right investors; too late and you are grappling with completing the application and hope that it is processed in no more than 30 days. Too often, we have business owners that consider the EIS AA process as a separate concern from their growth strategy and funding planning. As we explained above, particularly in the current circumstances, being able to provide investors with EIS relief will be a source of advantage. It could be the difference between getting the funding you need to deliver on plans, and not. Therefore, incorporating the application process into your funding preparation plans and allowing some contingency for fluctuations in HMRC’s response time is advisable.

Important Note

Please remember that receiving Advance Assurance from HMRC is only confirmation that the business could qualify for EIS and does not provide certainty that your investors will meet the conditions of the scheme.



Despite the current conditions, equity deals are still taking place and provide a vital source of capital to growing businesses. However, at the same time, investors are aware that some funding is required for working capital; the purpose of investment must remain for value creation and growth, i.e. not survival. Therefore, businesses who plan to seek equity investment and believe they may qualify for EIS are encouraged to continue to apply for Advance Assurance during this time. Albeit, we would expect that, given the other Government schemes ongoing, that response times may vary.

This blog was written by Jay Sanghrajka, a Tax Partner at Price Bailey and Chand Chudasama, a Strategic Corporate Finance Partner. If you are raising funds or planning to and are not sure what to do about seeking SEIS/EIS Advance Assurance, please contact either our Tax or Strategic Corporate Finance team via the form below.


We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.


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