HMRC has updated its guidance on applying for venture capital schemes to include a requirement to check scheme conditions and provide potential investor details before applying for advance assurance
The guidance covers what potential applicants need to do if they want to find out whether they can potentially apply with a qualifying scheme for enterprise investment scheme (EIS), seed enterprise investment scheme (SEIS), social investment tax relief (SITR), or venture capital trust (VCT).
HMRC advises that applicants who have used a venture capital scheme before do not have to provide details of their potential investors but notes that this will help an application.
For EIS, SEIS and VCT applications, applicants will need to provide an explanation of how they meet the risk to capital condition, which may include the details of their potential investors.
For EIS and VCT, they will also need explain how the money will be used for the growth and development of the company.
Applicants who have never used a venture capital scheme and are applying for investment from a VCT will have to provide details of the VCTs that plan to invest and the name of their fund managers.
If they are applying for EIS or SEIS and their company or social enterprise is raising money directly from investors, they must provide the name and address of any prospective investors.
If the company is listed on the Alternative Investment Market (AIM), applicants do not need to provide investor information, but if it plans to list on AIM they must provide the name and registration number of the nominated adviser that supports its listing.
If the company seeks investment through a fund manager or business promoter, applicants must provide evidence that they have agreed to act on their behalf and will continue to work with them. For those seeking investment through a crowdfunding platform, they must provide evidence that proposal has been accepted and that the platform will continue to work with them.
Report by Pat Sweet