Potentially, yes. You can obtain advance assurance from HMRC that your company and its proposed trade qualifies for either EIS or SEIS. It is not mandatory to do so, but it shows your potential investors that, subject to HMRC’s agreement, the company qualifies for either scheme.
Investors can (potentially) claim SEIS by investing in your company, provided all conditions are met, then (potentially) claim EIS at a later date through further equity investment (again provided certain conditions are met). SEIS cannot be claimed if EIS shares have already been issued. Both SEIS and EIS are complex schemes; too complex for this platform.
Income tax relief under SEIS can only be claimed when the company has been trading for at least 4 months or at least 70% of the funds raised have been spent. Income tax relief under EIS is only available after 4 months of trading. Either way, the investors need to part with their cash for qualifying shares. The company then applies to HMRC for the appropriate certificates (under either EIS or SEIS) to issue to the investors so they can claim the income tax relief in their personal tax returns. That is, there is a process involved before income tax relief can actually be claimed by the investors.
However, as mentioned above, advance assurance from HMRC gives potential investors some comfort that the valuable tax reliefs under either EIS or SEIS will be available before they part with their money and invest in your company.
Michael O’Brien is head of technology and international at Kreston Reeves