The Enterprise Investment Scheme (EIS) is administered in HM Revenue & Customs (HMRC) by the Small Company Enterprise Centre (SCEC) - see contact details at the end of this guide.
The SCEC decides if a company and a share issue qualifies. If they do, the SCEC then takes responsibility for checking the accounts etc of the company to ensure that it continues to meet the requirements of the Scheme.
The SCEC also operates an advance assurance scheme, whereby companies can submit their plans to raise money, details of their structure and trade etc. before the shares are issued, and the SCEC will advise on whether or not the proposed issue is likely to qualify. Information on the advance assurance procedure and the kind of information the SCEC will need to have to consider an application is at VCM14000. Although companies are not required to use it, we recommend using the Form EIS(AA) to make such an application. That form can be printed off the HMRC website. Guidance on what kind of information the SCEC need to consider an application for an advance assurance can be found at VCM14040.
Companies are not required to obtain such an assurance, but companies, particularly those using the EIS for the first time, may consider it prudent to do so. It gives an opportunity to spot any problems before shares are issued, and an assurance from the SCEC is also useful for companies to show to potential investors.
Once the shares are issued – irrespective of whether or not an advance assurance has been given – the company has to complete form EIS1 and send it to the SCEC. This form can be got from the SCEC, or downloaded from the HMRC website. A separate form EIS1 must be submitted for each share issue.
Please note that a form EIS1 cannot be accepted by the SCEC unless the company has been trading for at least four months. And it also cannot be accepted if it submitted later than two years after the end of the year of assessment in which the shares were issued (or two years after the end of the four month period if that is after the end of that year of assessment).
If the SCEC accepts that the company, its trade, and the shares all meet the requirements of the Scheme, it will issue a form EIS2 to that effect, and supply sufficient forms EIS3 for the company to send to the investors so they can claim tax relief (see Part 1).
This process is repeated each time a company issues shares which it wishes to attract EIS reliefs for investors.