Nearly half of entrepreneurs in the UK do not know what Advance Assurance is, despite it making their business more attractive to potential investors, according to a new survey by the Great British & Northern Irish Entrepreneur Awards and Propel by Deloitte.
Thirty-six per cent of the 107 entrepreneurs surveyed said they were ‘not aware’ of Advance Assurance and a further 12% said they had heard of it but didn’t know what it is. Fifty-two per cent were aware of the facility and its benefits.
Advance Assurance is a HMRC-operated initiative which tells investors that a company is compliant with the government’s Seed Enterprise Investment Scheme (SEIS). Certification informs investors that a business has satisfied all criteria necessary applicable to SEIS, thus making a business a more attractive investment prospect.
Just 22% of respondents said they have received Advance Assurance from HMRC, but a further 20% said they are hoping to gain certification in time for their next funding round. However, the majority (53%) said they hadn’t even applied for Advance Assurance.
A reason for a lack of uptake for Advance Assurance may stem from a worrying lack of awareness of SEIS and EIS (Enterprise Investment Scheme). Nearly half said they were not aware of the schemes, with 30.8% saying they didn’t know about it at all, and 19% said they’d heard of them but don’t know what they are. Forty-six per cent did describe their understanding of the benefits of SEIS and EIS as ‘strong or ‘very strong’, however.
Nick Levine, Advisory Lead at Propel by Deloitte, said: “As the SEIS and EIS schemes are hugely tax efficient, it is surprising to see that nearly 50% of entrepreneurs surveyed are not aware of these benefits. Entrepreneurs from early stage businesses should check to see if they qualify for these schemes if they seeking to raise equity capital in the near future.
“It is worthwhile to understand the benefits, as well as the intricacies of the schemes. This has also recently been highlighted by the Office of Tax Simplification (OTS) who found that their reliefs and applications are commonly misunderstood by business.”
Francesca James, co-founder of the Great British & Northern Irish Entrepreneur Awards, said: “In the UK we have some of the most attractive start-up investment tax relief schemes in the world.
“It’s important that entrepreneurs understand both process and benefits of Advance Assurance. At the start of this year, new guidelines came into force and these new rules, coupled with the results of our survey have highlighted a need for greater education and understanding of schemes available to them. We’ll be working with our partners and those within the Great British & Northern Irish Entrepreneur Awards alumni who have been through the process to ensure we can support future successes with information and advice.”
Of those who have received Advance Assurance certification for their business, 53% described the application process as ‘long but straightforward’, 8% as ‘long and complex’, 12% as ‘quick and straightforward’, and 26% said it was ‘quick but complex’.