The more complex the agreements or the more complex the period between pre-emption and the issuance of shares, the more the conditions for the relief of the ISR may not be met. In the absence of these characteristics, HMRC will likely consider that pre-subscription is indeed a loan (and that loan conversions are not qualified for SEIS or EIS). The more complex the agreements or the more complex the period between pre-emption and the issuance of shares, the more likely the conditions for the relief of the SEIS will not be respected. The SAA cannot serve as an investment instrument offering benefits other than investor protection. Payment for the subscription must not be a loan. HMRC will not consider pre-subscription agreements to be suitable for SEIS unless the agreement is concluded: the new guidelines confirm the RMC`s long-standing positions on a number of technical aspects. For example, the SAA should not be used as an investment tool offering benefits other than investor protection. The new guidelines also apply to the fact that HMRC does not consider ASAS to be appropriate for NRS and/or SIIs, unless the agreement is concluded: if the company wishes to apply for prior insurance, it should do so before the ASA is taken out. Pre-insurance is a non-legal discretionary benefit. Prior guarantees are not mandatory to obtain the discharge of the SS. – Does not allow in any case to refund the payment of the subscription; – Cannot be modified, cancelled or assigned; – Does not bear interest charges; and – has a longstop date (probably no more than 6 months from the date of the agreement).
The company must demonstrate how the date and terms of the agreement align with its business plan and planned spending on growth and development. The issuance of shares must be aimed at developing the business, and not just to comply with the agreement itself. Advance Subscription Agreements (ASAS) is sometimes used to quickly raise funds for a company, at a time when the value of shares is not easy to determine. An ASA allows investors to disburse subcontracting funds to a company at an early stage, with shares being issued later. The conditions of such an ASA will therefore not be complex. However, the guidelines contain a new attitude on the part of HMRC, as the company wishing to apply for prior insurance should do so before the ASA is taken out. If pre-insurance is requested with an existing ASA, HMRC will reject the application (on the grounds that the pre-insurance service is a non-regulatory discretionary service and considers that prior guarantees are not mandatory to obtain EIS relief. HMRC appears to consider an investment to be “as good as it was made when entering into an ASA”, so there is no need to consider an application in advance) and instead the company should rely on filing the S/EIS1 declaration of conformity at the appropriate location after the issuance of shares. To subscribe to this content, simply call 0800 231 5199 at the seis landfill will only be available from the date of issue of shares. A declaration of conformity (SEIS1) should not be filed before that date. . .