When an SEIS or EIS funding round closes, most founders assume the hard work is done. The advance assurance is in, the shares are issued, the money is in the bank. But there is a critical post-round step the company must complete before any investor can actually claim the tax relief the round was structured around: filing the compliance statement with HMRC.
This guide covers the company-side obligation, how the process flows from compliance statement to investor relief certificate, what HMRC looks at, and where founders most commonly go wrong.
What a compliance statement is and why the company files it
After an SEIS or EIS round completes, the company must file a compliance statement with HMRC confirming that it and the share issue met the relevant qualifying conditions. HMRC reviews the statement, and if satisfied, authorises the company to issue relief certificates to each investor. Those certificates are what investors use to claim income tax relief on their Self Assessment returns. Without the company filing, no investor can claim.
For SEIS, the company can raise up to £250,000 in total under the scheme. For EIS, the company can raise up to £5m per year and £12m over its lifetime across the venture-capital schemes. The compliance statement is how HMRC verifies the round stayed within those parameters and that all other qualifying tests were met.
Where this sits in the SEIS and EIS journey
The compliance statement is the step founders most often overlook because it comes after the round, when attention has moved on to deploying the capital. Understanding the full sequence helps to see why it matters.
| Stage | What happens | Who acts |
|---|---|---|
| Qualify | Company checks it meets the SEIS or EIS qualifying tests | Company |
| Advance assurance | HMRC pre-clears that the proposed share issue is likely to qualify | Company applies, HMRC responds |
| Raise | Shares issued to investors; funds received | Company |
| Qualifying period | Company reaches the filing gate: SEIS, 4 months' trading or 70% of the money spent; EIS, 4 months carrying on the activity | Company |
| Compliance statement | Company files SEIS1 or EIS1 with HMRC | Company |
| HMRC authorises | HMRC reviews and, if satisfied, authorises the company to issue certificates | HMRC |
| Relief certificates issued | Company issues SEIS3 or EIS3 certificates to each investor | Company |
| Investor claims | Investor uses certificate to claim relief on their Self Assessment return | Investor |
Advance assurance (step 2) is covered in detail separately. If you are earlier in the process, the advance assurance guide and the SEIS vs EIS comparison explain the lead-up. This guide focuses on step 5 onwards.
From company statement to investor certificate: the SEIS1/EIS1 to SEIS3/EIS3 flow
The process moves in three stages after the round closes.
- Company files the compliance statement. The company submits the SEIS1 (for an SEIS round) or EIS1 (for an EIS round) to HMRC. These are the commonly-used names for the company-side forms; the current submission route is on the HMRC SEIS and EIS apply pages.
- HMRC reviews and authorises. HMRC checks the compliance statement against the qualifying conditions. If satisfied, HMRC authorises the company to issue the investor-facing relief certificates. If HMRC has questions or identifies a deficiency, it will correspond with the company before authorising.
- Company issues relief certificates. Once HMRC has authorised, the company issues a SEIS3 certificate (for SEIS investors) or EIS3 certificate (for EIS investors) to each individual investor. The investor uses the certificate to claim their relief on their Self Assessment return.
The SEIS3 and EIS3 are not HMRC documents. They are company-issued certificates, produced after HMRC's authorisation. The company is responsible for ensuring the certificates are accurate and reach each investor.
What HMRC checks at this stage
When HMRC reviews the compliance statement, it is checking that the qualifying conditions were met at the point of investment and, in relevant respects, continue to be met. For SEIS, this means the company qualifying tests: at the time of investment the company must have had gross assets of no more than £350,000, fewer than 25 full-time-equivalent employees, and been within three years of starting to trade. The total raised must not have exceeded £250,000 under SEIS.
For EIS, HMRC checks against the EIS company qualifying tests, including the annual and lifetime fundraising limits and the relevant company-age and activity conditions.
Across both schemes, HMRC will also look at whether the money was used for a qualifying purpose. Funds that went into activities excluded from SEIS and EIS, or were deployed in ways inconsistent with the scheme rules, can lead to refusal or withdrawal of authorisation.
An important point: receiving advance assurance before the round does not mean HMRC has pre-approved the compliance statement. It is a pre-clearance of the proposed issue; the compliance statement is assessed on the actual facts after the round. Conditions matter at both points.
Timing: when can we file?
The compliance statement cannot be filed the moment the round closes. There is a gate the company has to reach first, and it differs by scheme.
For SEIS, the company must have been carrying on the qualifying trade for at least four months, or have spent at least 70% of the money raised on that qualifying activity, before it can file the SEIS1. Either limb opens the door: a company that deploys the round quickly can reach the 70%-spent gate well before four months are up.
For EIS, the test is simpler. The company must have carried on the qualifying business activity for at least four months before it can file the EIS1. There is no spend test on the EIS side.
On the deadline at the other end, the EIS1 has a filing window: broadly two years from the end of the tax year in which the shares were issued (or two years from the end of the four-month qualifying period, if that is later). The SEIS1 has no hard filing deadline once the four-month or 70%-spent gate is met, but there is no reason to delay, because investors cannot claim until the certificates are issued.
Getting the timing right is one of the practical service questions on which early advice is most valuable. File before the gate and HMRC rejects the statement; sit on it after the gate and you hold up every investor's claim.
Common failures at the compliance statement stage
The following are the failure patterns that regularly cause compliance statements to be rejected or delayed.
- Filing too early. The company submits the compliance statement before the required trading or fund-deployment period has elapsed. HMRC rejects it, and the company must refile, delaying relief for every investor.
- Funds not yet deployed to a qualifying purpose. The money raised is sitting in a cash account or has been used for activities that fall outside the qualifying conditions. HMRC cannot authorise until it is satisfied the use-of-funds test is met.
- A qualifying-test breach after the round. The company changes its activities, takes on a disqualifying trade, or breaches another condition between the share issue and the filing date. A breach after investment can invalidate the compliance statement for some or all investors.
- Assuming advance assurance means automatic authorisation. Advance assurance is a separate, earlier step. Companies that received it sometimes assume the compliance statement is a formality. HMRC assesses on the actual post-round facts. If the facts differ from the advance assurance application, the outcome can differ too.
- Issuing relief certificates before HMRC authorises. The company issues SEIS3 or EIS3 documents to investors before receiving HMRC's authorisation. These certificates are not valid until HMRC has authorised the compliance statement. Investors who claim on the basis of premature certificates may face compliance issues with their own returns.
A worked ordering example
To illustrate the sequence in concrete terms, consider a seed-stage technology company that closes an SEIS round with three angel investors.
| Step | Company | HMRC | Investor |
|---|---|---|---|
| Round closes; shares issued | Issues shares, receives funds | Pays for shares | |
| Qualifying period | Deploys funds into qualifying trade; continues to meet SEIS tests | Waits for certificate | |
| Company files compliance statement (SEIS1) | Submits SEIS1 to HMRC confirming qualifying conditions met | Receives statement; reviews it | |
| HMRC authorises | Receives authorisation from HMRC | Issues authorisation to company | |
| Company issues relief certificates (SEIS3) | Issues a SEIS3 certificate to each of the three investors | Receives SEIS3 certificate | |
| Investors claim relief | Claims 50% SEIS income tax relief on Self Assessment return using SEIS3 |
The same sequence applies for EIS, with EIS1 as the compliance statement and EIS3 as the investor certificate. Investors can claim 30% EIS income tax relief on up to £1m invested per tax year (rising to £2m where the excess is invested in knowledge-intensive companies). The company-side steps are identical in structure.
Get the filing right so your investors get their relief
The compliance statement is the step that converts a well-structured round into actual tax relief in investors' hands. It is also the step most founders are least prepared for when the round closes, because it sits outside the fundraising narrative and requires a precise understanding of when and how to file.
The practical questions founders face at this stage include confirming the qualifying period has elapsed, verifying fund deployment meets the use-of-funds conditions, preparing an accurate statement, and ensuring the SEIS3 or EIS3 certificates issued to investors are correct. Getting any of these wrong delays relief for investors who planned their tax position around it.
If you have recently closed an SEIS or EIS round and need to work through the compliance statement, the SEIS and EIS service covers the company-side filing from round close to certificate issue. You can also explore the SEIS company checklist and the SEIS vs EIS guide for context on the qualifying conditions the compliance statement must confirm.