What Happens After You Receive SEIS/EIS Approval? (Step‑by‑Step Guide)

Receiving SEIS or EIS approval feels like crossing the finish line, yet it’s only the start of your compliance journey. The approval letter, whether it follows the SEIS/EIS approval process or prior Advance Assurance, confirms that HMRC has accepted your eligibility in principle. It does not release tax relief to investors. 

To unlock the benefit, you must carry out a series of post‑approval steps: issue ordinary shares, file statutory returns, submit the SEIS compliance statement or EIS1 form, send investors their certificates, and maintain compliance for at least three years. Mistakes at this stage can jeopardise your investors’ tax relief and your own credibility.

This guide provides a business‑focused roadmap through the post‑approval SEIS/EIS requirements. Each section explains SEIS’s next steps and relevant costs. You’ll learn why share classes matter, how to update your cap table, when to file SEIS1/EIS1, and what triggers HMRC’s monitoring. 

Understanding What SEIS/EIS “Approval” Really Means

Approval, whether through advance assurance or formal clearance, simply tells investors that HMRC is likely to grant tax relief if the company issues qualifying shares and follows the rules. It does not guarantee relief; the company must still issue shares, spend the money on qualifying activities and submit compliance forms. By understanding the scope of approval, founders can avoid complacency.

Advance Assurance vs Formal Approval – Key Differences

Advance assurance is an optional pre‑funding confirmation that a planned investment is likely to qualify. Once you apply with a business plan and a cap table, HMRC provides a non‑binding letter indicating eligibility. Formal approval, by contrast, occurs after shares are issued and a compliance statement is filed. Only then will HMRC authorise tax relief and assign unique investment reference numbers. If you secured advance assurance and later changed terms (share price, investor names or cap table), you must ensure the actual deal aligns with that assurance; otherwise, HMRC may reject the SEIS1 form or EIS1 form.

What Approval Covers (and What It Doesn’t)

Approval confirms that your proposed trade is a qualifying activity and that your company meets size and age limits. Under reforms effective April 2023, SEIS companies can raise up to £250k, hold up to £350k of gross assets and be up to three years old; individual investors can commit up to £200k. The EIS annual cap remains £5 million, but the government has announced that from April 2026, the annual EIS limit doubles to £10 million and the lifetime cap rises to £24 million (or £40 million for knowledge‑intensive companies). These caps set the maximum you can raise, but do not relieve you from post‑approval obligations. Approval does not cover share issuance, SH01 filings, cap table updates, compliance statements or investor notifications, all of which you must handle promptly.

Investor Expectations Post‑Approval

Once investors see the approval letter, they expect the round to close quickly. They will want to know when they will receive their shares, when the company will file the EIS post approval forms, how the business will meet HMRC post-investment requirements, and how soon they can claim relief. Delays not only cause frustration but can also jeopardise the relief if rules are breached. Communicate a timeline early, keep them informed of filings and avoid promising dates you can’t meet. Use an automated system such as Undo Capital to send investor notifications, track share issuance and generate compliance statements.

Step 1 – Issue Ordinary Shares to Investors

Before any paperwork can be filed with HMRC, you must issue qualifying shares. This involves preparing subscription agreements, board resolutions and share certificates. Under both schemes, you may only issue ordinary shares, with no preference or redemption rights. The shares must be paid up in cash and cannot carry guaranteed dividends or asset rights.

Ordinary Shares Only (No Preferences or Guarantees)

HMRC’s rules insist that SEIS/EIS shares are full‑risk ordinary shares with no preferential rights. The Sprintlaw guide warns founders not to issue preference or redeemable shares because HMRC treats these as a form of debt or a guaranteed return, which disqualifies relief. Similarly, the Vestd rules note that investors cannot be employees or connected persons and must not hold more than 30% of shares; this ensures the investment is genuinely at risk. When drafting your Articles of Association, check that the SEIS/EIS share class offers voting rights and is non‑redeemable. If you plan to mix ordinary and preference shares, ensure SEIS/EIS shares have no special rights.

Pricing and Valuation Alignment

Set a fair and justifiable valuation for the round. While HMRC does not dictate a specific price, valuations far above market may be challenged at the SEIS/EIS filing stage. Many founders obtain independent valuations or use prior investment terms as a benchmark. Keep a record of your methodology, comparable sales, revenue multiples or discounted cash flows, and ensure all investors pay the same price per share. Divergent pricing or discounts could be seen as providing value to certain investors, which the HMRC manual warns may result in relief being withdrawn.

Documenting the Share Allotment

Issuing shares isn’t merely exchanging cash for certificates; it requires formal documentation. Board minutes must authorise the allotment. Subscription agreements should define the number of shares, price, investor details and payment schedule. After the money clears, prepare and send digital share certificates. Each certificate must match the numbers on your cap table and SH01 form. Misalignments between agreements, certificates and statutory filings are a common error.

Step 2 – File SH01 with Companies House

Once shares are allotted, you must inform Companies House by submitting Form SH01 within one month. This form records the number of new shares, the class (ordinary), the nominal value and the date of allotment. Filing late breaches the Companies Act and can attract penalties.

Why SH01 Matters for SEIS/EIS Compliance?

Companies House filings and SH01 submissions provide HMRC and potential investors with transparency. Rapid Formations notes that every allotment of new shares requires an SH01 return; the form must be delivered within one month of allotting shares and details the date, share class and amount. Failure to file promptly can invalidate your cap table and delay compliance statements, as HMRC cross‑checks SH01 data against the SEIS1/EIS1 form.

What Needs to Be Submitted?

The SH01 form requests the total number of shares allotted, each class, nominal value and amount paid. When filling it in, ensure it matches your board minutes, subscription agreements and share certificates. If you issued shares on different dates or in tranches, file a separate SH01 for each date. Also, update your company’s statement of capital to reflect the new total share capital. If pre‑emption rights apply, obtain existing shareholders’ consent before allotting.

Common Mistakes in SH01 Filing

Late filing is the most frequent mistake. Other errors include misclassifying shares (e.g., listing preference shares as ordinary), reporting the wrong nominal value or failing to include the correct share allotment dates. Always double‑check the form before submission. Using a platform that integrates with Companies House eliminates manual data entry and ensures your SH01 aligns with your cap table.

Step 3 – Update Your Cap Table and Shareholder Records

After filing SH01, update your cap table to show the new shareholding structure. An accurate cap table is essential for investors and HMRC; it informs valuations and later financing rounds.

Aligning Legal Documents and Cap Table

Your cap table should mirror the numbers in your SH01 and subscription agreements. Record the number of shares each investor owns, their percentage of ownership and any option pools or warrants. If the cap table shows incorrect numbers, investors may receive the wrong number of shares or certificates, leading to compliance issues. Undo Capital’s cap table management tool automatically updates holdings when shares are issued, preventing manual errors.

Issuing Share Certificates

Share certificates provide legal proof of ownership. Under SEIS/EIS, you must issue certificates promptly after allotment. Each certificate should show the investor’s name, number of shares, share class and date of issue. Use digital certificates with secure electronic signatures to speed up the process. Once HMRC approves the compliance statement, you will also issue SEIS3/EIS3 certificates, but don’t confuse these documents: share certificates confirm ownership; SEIS3/EIS3 confirm eligibility for tax relief.

Maintaining Accurate Investor Records

Maintain a register of members recording each investor’s name, address, number of shares and date of allotment. This register must be kept at your registered office or an authorised location. Keep scanned copies of subscription agreements, board minutes and payment evidence. Inaccurate records can trigger HMRC queries and jeopardise relief. Automating record keeping through Undo Capital helps ensure consistency.

Step 4 – Submit SEIS1/EIS1 to HMRC

To unlock tax relief, you must file a compliance statement after the shares are issued. The SEIS1/EIS1 form confirms that the shares were issued under qualifying conditions and that funds are being used for a qualifying trade. Until HMRC approves this form and sends SEIS3/EIS3 certificates, investors cannot claim relief.

What Is SEIS1/EIS1?

The SEIS1/EIS1 is a formal return to HMRC. It details the number of shares issued, the amount raised, the date of issue and how the funds will be used. OnTheGo Accountants describes it as the formal return filed after issuing shares that confirms shares were issued in line with scheme rules and that the money raised is being used for qualifying activities. Without an approved compliance statement, you cannot issue SEIS3/EIS3 certificates.

When Can You Submit (Use of Funds Criteria)?

You cannot submit a compliance statement immediately after closing the round. HMRC requires proof that your business is trading. Under SEIS, you must have either traded for at least four months or spent at least 70% of the SEIS funds on qualifying activities before filing. Under EIS, the company must have carried out qualifying business activity for at least four months; there is no spending threshold. The compliance statement must then be filed within two years of the later of: the end of the tax year in which shares were issued, or the four‑month trading/activity milestone. Missing this deadline permanently loses relief.

Gathering Required Evidence

When you submit SEIS1/EIS1, HMRC expects consistency across your filings. Prepare:

• Company details: Unique Taxpayer Reference (UTR), Companies House number, registered address.
  
  
• Share issue details: Dates, number of shares, share classes and price paid. These must match your SH01 filings.
• Use of funds: Bank statements showing receipt of funds and evidence of spending on qualifying activities such as salaries, research or marketing. Avoid non‑qualifying uses such as repaying debt or acquiring other businesses.
• Business activities: A description of your trade, demonstrating why it qualifies and avoiding excluded activities like financial services or property development.
• Eligibility confirmation: Prove your company still meets SEIS/EIS conditions for age, employee count and gross assets.
• Supporting documents: Articles of Association, board minutes, subscription agreements and an updated cap table.
• Investor details: A list of investors, investment amounts and number of shares issued.

Typical HMRC Response Timeline

Once submitted, HMRC processes compliance statements within roughly 15–45 working days, though processing times vary depending on workload. As part of the SEIS/EIS timeline after approval, HMRC returns a letter (sometimes called SEIS2/EIS2) with a unique investment reference and a supply of SEIS3/EIS3 certificates for distribution. If your submission is incomplete or inconsistent, HMRC may ask for clarification. Respond quickly to avoid delays.

Step 5 – Receive SEIS3/EIS3 Certificates (for Investors)

Once HMRC approves your compliance statement, you will receive physical or digital SEIS3/EIS3 certificates with unique reference numbers. Each certificate corresponds to a single investor and lists the amount invested and the date of share issue.

What Investors Do with SEIS3/EIS3?

Investors use the certificates to claim income tax relief. They can either submit the certificate when filing their Self‑Assessment tax return or make a standalone claim using form SA100. Without this certificate, HMRC will not process the relief. Remind investors that they should keep the certificate for at least three years in case of HMRC enquiries.

How to Distribute Them Correctly?

Prepare a schedule matching investors to certificate numbers and ensure the figures align with your cap table. Then distribute certificates electronically or via post. Many companies opt to upload PDF copies to a secure portal. Avoid sending unencrypted attachments that could expose personal information.

Mistakes to Avoid

Common errors include issuing certificates before HMRC approval, misallocating certificate numbers or sending certificates to the wrong address. Also, ensure the date on the certificate matches the share issue date; misdating can invalidate the relief. If you discover an error, contact HMRC’s Venture Capital Reliefs Team immediately to request amended certificates.

Step 6 – Follow All Post‑Approval Compliance Rules

After issuing SEIS3/EIS3 certificates, your company enters a monitoring period lasting at least three years. This period begins from the later of: (a) the date shares were issued, or (b) the date your company commenced its qualifying trade. Throughout this period, you must avoid disqualifying events and comply with all HMRC requirements. Investors must also hold their shares for the full three years to retain their tax relief.

3‑Year Monitoring Period

Investors must hold their SEIS/EIS shares for at least three years; selling early, except to a spouse, triggers clawback of relief. For companies, the monitoring period lasts three years from the later of: (a) the date of share issue, or (b) the date the company commenced trading. Throughout this period, companies must maintain a qualifying status and avoid disqualifying events. During this period, the company must remain unquoted, carry on the qualifying trade and retain its independence (not controlled by another company). If the company is sold or merges during this period, relief may be withdrawn.

No Disqualifying Events (Triggers That Break Compliance)

HMRC lists several events that must be reported within 60 days. Investors must notify HMRC if they cease to be qualifying investors, take out a loan linked to the investment, dispose of shares within the holding period, or receive value from the company. Companies must notify HMRC if the funds raised will not be used as required, if the company ceases to be qualifying, if it or a connected person provides value to investors, if it repays share capital to non‑EIS investors or acquires a trade or assets from a controlling party. Failing to notify within 60 days can result in penalties.

Disqualifying events also include issuing shares with preferential rights, returning capital to investors, or allowing investors to become connected (for example, by becoming employees or directors, except as unpaid directors or business angel investors). Providing value, such as loans or services, can reduce or withdraw relief. Always monitor transactions to ensure no side benefits are given.

Use of Funds Rules

SEIS funds must be spent within three years of the investment on qualifying activities such as product development, marketing, or hiring staff. EIS funds must be spent within two years. Do not use SEIS/EIS funds to repay existing debt, acquire shares or businesses, or pay dividends. Keep detailed records of all spending with invoices, bank statements, and contracts.

Investor Holding Period Requirements

Investors must hold their shares for at least three years. If an investor transfers shares early (other than to a spouse), relief will be clawed back. If the company repurchases shares or grants an option during the period, this may also count as a disposal. Educate investors on the importance of keeping their shares and not obtaining loans secured on the shares.

Step 7 – Maintain Accurate Documentation and Evidence

Compliance is a continuous process. HMRC may request evidence at any time during the monitoring period. Keeping organised records reduces stress and ensures you can respond quickly.

Corporate Documents Archive

Store board minutes, Articles of Association, subscription agreements, investor registers and share certificates in a secure archive. Maintain copies of SH01 filings and Companies House confirmations. Consider using a secure cloud platform to store and index documents; Undo Capital’s data room offers encrypted storage and automatic indexing.

Bank and Financial Records

Keep bank statements showing receipt of funds and records of expenditure on qualifying activities. Retain invoices, contracts and payroll records. HMRC may request evidence that you spent at least 70% of SEIS funds before filing the compliance statement and that you used all funds within the three‑year window. Detailed records also help when raising follow‑on rounds.

Periodic HMRC Monitoring Requests

HMRC may ask for evidence during the monitoring period, especially if there are changes in shareholdings or trade. Respond within the deadline, usually 30 days, and provide all requested documents. Failure to respond can trigger investigations. Keep your data organised so you can produce reports quickly.

With Undo Capital, you can store all corporate and financial documents in a secure data room, automatically associate them with investors and share issues, and retrieve them instantly when HMRC requests evidence.

Step 8 – Communicate Properly with Investors

Your investors rely on you to maintain compliance and to communicate how their money is being used. Regular updates build trust and reduce the chance of surprises.

Post‑Round Reporting

Send investors a post‑round report summarising how funds are being allocated, milestones achieved and anticipated timelines for filings. Provide an expected date for SEIS1/EIS1 submission and distribution of certificates. Transparent SEIS/EIS reporting shows professionalism and reassures investors that the post‑approval obligations are being handled.

Milestone Updates

Continue updating investors throughout the monitoring period. Share progress on product development, revenue milestones or hires funded by the investment. If you pivot or encounter delays, communicate why and how you will remain compliant. Regular communication reduces the risk of investors taking premature action with their shares.

Compliance Transparency

Inform investors if any event could impact relief, for example, if a director becomes a paid employee or if you plan to acquire another company. Seek legal advice and inform HMRC promptly. Transparent communication helps investors plan their tax affairs and prevents disputes.

Common SEIS/EIS Post‑Approval Mistakes

Even experienced founders make errors after approval. Awareness of common pitfalls helps you avoid them.

Issuing Disqualifying Share Classes

Issuing preference or redeemable shares disqualifies relief because they provide a guaranteed return. Only issue full‑risk ordinary shares and ensure your Articles prohibit preference rights for SEIS/EIS shares.

Forgetting to File SH01

Failure to file SH01 within one month is a common oversight. HMRC cross‑checks SH01 data against SEIS1/EIS1 forms; missing filings can delay approval and risk penalties.

Incorrect Cap Table Updates

Inconsistent cap tables lead to mismatches between SH01 filings, compliance statements and certificates. Maintain a single source of truth and use software that automatically updates holdings.

Using Funds Incorrectly

Spending funds on non‑qualifying activities, such as repaying debt or acquiring another business, violates the schemes and triggers relief withdrawal. Track expenditure and stick to qualifying activities.

Providing Value to Investors

Value received by investors, such as loans, services, or goods, reduces or withdraws relief. Avoid any arrangements that return value to investors during the monitoring period.

Failing to Send SEIS3/EIS3

Delays in sending SEIS3/EIS3 certificates prevent investors from claiming relief. Ensure you distribute certificates promptly after HMRC approval and keep a record of dispatch.

Not Monitoring Disqualifying Events

Many founders overlook the obligation to notify HMRC within 60 days of disqualifying events. Use a calendar or automated alerts to track deadlines and ensure timely notification.

Correcting Issues After SEIS/EIS Approval

Mistakes happen. When they do, act quickly to mitigate damage and preserve relief where possible.

Notifying HMRC

If a disqualifying event occurs, for example, you realise funds were used incorrectly, or an investor becomes connected, notify HMRC within 60 days. Be transparent about the circumstances and provide evidence of corrective actions. Prompt notification reduces penalties and may limit relief withdrawal.

Corrective Filings

Suppose you discover errors in SH01, the cap table or compliance statements, file corrected documents with Companies House and HMRC. Include a cover letter explaining the error and evidence that the correct shares have been issued. Corrections should be filed before HMRC identifies the issue to demonstrate good faith.

Reissuing Shares

If shares were issued with incorrect rights (e.g., preference rights), consider reissuing them as ordinary shares. You may need to cancel the original issue and re‑allot the correct shares. Seek legal advice and ensure all investors consent.

Updating Investor Records

Send amended share certificates and, if necessary, new SEIS3/EIS3 certificates to investors. Keep a clear audit trail of changes.

Re‑applying or Revalidating Eligibility (When Necessary)

If the mistake fundamentally disqualifies the scheme (for example, funds were used to buy another company), you may need to reapply under EIS or other reliefs once the issue is rectified. Consult HMRC or a tax professional to assess whether you can salvage the relief or need to start over.

How Undo Capital Simplifies SEIS/EIS Post‑Approval Work?

Undo Capital offers an automated platform built specifically for SEIS/EIS rounds. Automated share issuance workflow generates subscription agreements, board minutes and digital share certificates in seconds. You can create SEIS1/EIS1 forms with pre‑filled data and generate the required supporting documents.

Stay compliant throughout your SEIS/EIS journey. Undo Capital automates every post‑approval step, from share issuance to HMRC documentation, so you can focus on building your business.