We contacted HMRC to determine whether this applied to ASA and SeedFAST made prior to that date, or only for asa performed prior to that date, and confirmed that ASAs executed before December 30, 2019 were evaluated in accordance with HMRC`s previous guidelines, but the new maximum directive for the 6-month shutdown date applies to agreements that are executed after that date. In particular, HMRC highlights the specific characteristics that an ASA must have to be adapted to EIS or SEIS landfills and confirms that it envisages an ASA suitable for THE EIS or SEIS only if the agreement is available: as the name suggests, it is a specific agreement concluded by investors and companies applying for financing, is used. The agreement allows an investor to pay in advance for the company`s shares to be awarded at a later date. Often, this date coincides with the date of the next financing cycle (the next time the company wants investments), but it could also be at the point of sale of the company or at an agreed long-term date (more information on this below). In the past, HMRC has provided prior assurance for ASAs as qualification for EIS and SEIS reliefs, but did not have specific guidelines on the terms of these instruments. ASA investors can benefit from tax relief under an Advanced Subscription Agreement under the EIS and SEIS systems, as opposed to L CLN funding. Since funds may have to be repaid to the investor under an NLC, the capital is not considered “threatened” and is therefore not eligible for EIS or seis. The investor also gets a reduced price for the shares as soon as they are finally issued. The use of an ASA has benefits for both investors and the company. It may be more convenient for the company, because in order to issue shares, a company must be evaluated formally and professionally to determine the value of the shares. This can be a long-term process that can prevent the company from receiving the investment.
Implementation of an agreement will speed up the transfer of funds without the formal protocol, which will then be finalized at a later date.