This consultation seeks feedback on how to better target the non-statutory advance assurance service for the enterprise investment scheme (EIS), seed enterprise investment scheme (SEIS) and the venture capital trusts (VCT) scheme, and also includes the social investment tax relief (SITR).

Options under consideration range from restricting access to the schemes to certain types of companies to providing a new service for discrete questions.

HMRC says it has doubled its capacity since 2011-12,but demand has trebled and is forecast to increase. Its aim is to focus on cases of genuine uncertainty and reduce routine reliance upon the service.

However, the consultation rules out suggestions from industry members that the advance assurance service should become a paid-for service, either for all companies or for companies seeking a fast track opinion.

Instead, HMRC asks for views on other suggestions, including doing nothing so that all companies would continue to be able to access the advance assurance service. However, it warns if no changes are made, response times will continue to increase.

Withdrawing the service in whole or in part would require companies and investors to assure themselves, and their investors, of their eligibility for the venture capital schemes. HMRC points out there is already a large community of specialist advisers providing support to companies seeking investment under the tax-advantaged venture capital schemes. It is likely that, until now, the advance assurance has merely duplicated their work and confirmed the view the adviser has already arrived at. However, it concedes that this approach might be too costly for small companies.

Other proposals include looking for ways to prioritise the advance assurance service, such as by limiting it to companies seeking their first investment under any of the tax-advantaged venture capital schemes. Alternatives are restricting access by reference to the size of the investment or of the size of the company, or both; limiting it to companies seeking SEIS investment only; or restricting advice to a company’s first one or two advance assurance applications only.

HMRC states: ‘We have already announced, as part of our guidance published in May 2016, that we reserve the right to withhold an opinion if we chose. We will withhold an opinion where, for example, it becomes apparent that the advance assurance application is seeking to test the boundaries of our rules rather than confirm whether or not a company is eligible on their set of circumstances.’

The consultation says that several representative bodies have suggested that HMRC enable companies to seek an advance assurance on discrete aspects of a particular case, which would allow for faster responses to discrete questions about a company’s eligibility under a specific rule. This service could be provided either alongside or instead of the current advance assurance service, and HMRC is seeking feedback.

The department is also currently exploring the use of standard documents such as shareholders agreements for pre-approval. If an approved document was used routinely by all companies covered by an agreement this could help to reduce the need for advance assurances and make applications if easier and faster to check. The consultation states it may be most appropriate for industry bodies to take on the responsibility for developing and promoting standard documents.

The consultation closes on 1 February 2017.

The HMRC Tax-advantaged venture capital schemes – streamlining the advance assurance service is here