Structuring an SEIS Round: The Order of Operations

SEIS round structure is not a legal art; it is an order of operations. Assurance before money, shares before spend, evidence before certificates. Founders lose relief far more often by doing the right things in the wrong sequence than by being ineligible. This guide sets out the seven steps of a clean SEIS round in the order they must happen, what each step produces, and what breaks when two of them swap places.

Why SEIS round structure is an order, not a document

Every SEIS rule attaches to a moment in time. Eligibility is tested at the share issue. The three-year clocks start at the share issue. The SEIS1 can only go in after the four-month trading gate or the 70% spend gate. Certificates only exist after HMRC’s SEIS2 authorisation. Because the rules are time-anchored, a round is structured well when its events happen in the right order with the right gaps, and structured badly when they happen in a heap, whatever the documents say. The SEIS round structure below is the whole discipline.

Step 1. Confirm eligibility before anything moves

Check the company against the conditions while the round is still a spreadsheet: trade under three years old at the planned issue date, gross assets under £350,000 immediately before the issue, fewer than 25 full-time equivalent employees, no prior EIS or VCT money, a qualifying trade, and £250,000 of lifetime SEIS capacity remaining after any de minimis aid. Every test is walked through in the eligibility guide. Do this first because everything downstream assumes it; discovering an excluded activity in month three unwinds the whole round.

Step 2. Advance assurance, before money is taken

Advance assurance is HMRC’s provisional opinion that the company qualifies, and in practice it is the round’s admission ticket: most angels will not sign without it. Apply with named investors or evidence of genuine intent, a business plan and financials that show risk-to-capital growth intent, and drafts of anything unusual (an advanced subscription agreement, for instance). Do not take the money first and apply later; if HMRC declines, you are holding investment you cannot deliver relief on. The application itself is covered step by step in the advance assurance guide.

Step 3. Sequence the instruments

Decide what the money arrives through. Straight subscriptions are cleanest. If cash must land before the round prices, use a properly drafted advanced subscription agreement, never a loan. If the raise mixes SEIS and EIS, the SEIS shares are issued first, with a clear date gap; the sequencing rules are in SEIS and EIS in sequence. This is also the moment to check the share class: full-risk ordinary shares, no preferential rights to assets on a winding up, no redemption features.

Step 4. Issue the shares properly

The issue is the legal centre of the round, and it has to be done in the right micro-order: money received by the company first, then the board resolves to allot, then the shares are entered in the register (which is the legal moment of issue), then Companies House filings follow. Shares issued before the cash arrives are a classic relief-breaker: SEIS requires subscription in cash, paid at or before issue. Date the board minutes, keep the bank statement, file the SH01 promptly. One tidy afternoon of company secretarial work protects the entire tranche.

Step 5. Spend the money on the qualifying activity

SEIS money must be employed in the qualifying business activity within three years of issue. Practically, the spend also drives your SEIS1 timing: the compliance statement can go in once the company has traded for four months, or once 70% of the money has been spent, whichever route you reach first. Keep the audit trail simple: the round lands in the company account, and outgoings tell a growth story consistent with the business plan HMRC saw at assurance.

Step 6. SEIS1, SEIS2, SEIS3, in that order

Once the gate is met, submit the SEIS1 compliance statement. HMRC reviews and, if satisfied, issues the SEIS2 authorisation with a unique investment reference. Only then can the company produce SEIS3 certificates for investors, who need them to claim. None of these steps is optional and none can be skipped or reordered; a company that promises investors “certificates next week” before SEIS1 has gone in is writing a cheque HMRC has not signed. The full paperwork chain, with current processing expectations, is in the four-step application guide and current processing times.

Step 7. Protect the round for three years

SEIS round structure does not end at the certificates. For three years from issue, the company must carry on the qualifying trade, the investors must stay under 30% and unconnected as employees, and no value must be returned. Repayment of a director’s loan, a share buyback, an acquisition structured the wrong way: each can claw back relief across the whole investor list. The failure modes and their prevention live in common mistakes that break SEIS status.

What breaks when steps swap

Money before assurance: an unfundable promise if HMRC declines. Shares before cash: subscription condition failed, relief gone at issue. EIS before SEIS: the SEIS door locks permanently. SEIS3 promised before SEIS2: reputational damage with your own investors. Spend before issue (founders paying suppliers personally, refunded later): a muddied cash trail that turns a clean SEIS1 into a correspondence file. Each failure is just a swap of two adjacent steps. Print the order, pin it above the desk, and make every adviser in the round work from the same sequence.

Common questions

What is the correct order for an SEIS round?

The SEIS round structure runs: eligibility check, advance assurance, instrument choice, share issue (cash first, then allotment, then register), qualifying spend, SEIS1 after the four-month trading or 70% spend gate, SEIS2 from HMRC, SEIS3 certificates to investors, then three years of protecting the conditions.

Can I take investor money before advance assurance?

You can, but you should not. If HMRC declines assurance you hold money you cannot deliver relief on, and unwinding that conversation is far harder than waiting a few weeks. If cash truly must move early, an advanced subscription agreement drafted to HMRC’s conditions is the standard route.

When can the company submit the SEIS1?

Once it has traded for at least four months, or spent at least 70% of the SEIS money, whichever comes first. Submitting before either gate is met wastes the queue time: HMRC will reject the statement.

Sources

HMRC, Apply to use the Seed Enterprise Investment Scheme; HMRC Venture Capital Schemes Manual; Companies Act 2006 filing requirements. Figures correct as at 17 July 2026, checked against our rules and limits reference. Education, not advice: run your round’s paperwork past a professional.