A letter from HMRC's Venture Capital Reliefs team asking for more information is not a refusal. It is usually the last chance to turn the application into an approval, and how you answer it decides which way it goes. The team has said plainly that it will not enter into protracted correspondence, so you should assume you get one good reply, not a conversation.
The thing to understand first. Advance assurance is a non-statutory, discretionary service. There is no right of appeal against the VCR team's decision. That is exactly why the reply to a question matters so much: once the decision is made, there is no process to overturn it, only a fresh application or the statutory route after the shares are issued.
Why HMRC Asks Rather Than Just Refusing
HMRC refuses an advance assurance application for two quite different reasons. The first is that it thinks the investment will not qualify. The second is that the information given, or the nature of the proposed activity, does not let it reach a conclusion at all.
A request for more information means you are in the second category, not the first. HMRC has not decided against you. It has decided it cannot decide, and it is giving you the chance to close the gap. That is a much better position than it feels like when the letter arrives, and it is worth reading the letter again with that in mind before you start drafting.
What HMRC Usually Asks About
The questions cluster around a small number of things, because they are the conditions that are hardest to assess from a first application.
The risk-to-capital condition
This is the most common. HMRC has to be satisfied on two limbs: that the company is aiming to grow and develop its trade over the long term, and that the investment carries a genuine risk that the investor loses more capital than they stand to gain as a net return. A question here usually means your business plan read as though the company was low risk, asset backed, or built to return the money rather than grow.
The answer is evidence of intended growth, not adjectives. Hiring plans, the product roadmap, the markets you intend to enter, what the money is actually being spent on. If the forecast shows the company comfortably profitable and cash generative from month three, expect to be asked why an investor is at risk at all.
What the company actually does
If your description of the trade was short, or written for investors rather than for a tax inspector, HMRC may not be able to place it. It is not deciding from your SIC code, it is deciding from the activities you describe. A question here is usually asking you to be concrete: what is sold, to whom, how revenue is earned.
Whether the trade is excluded
Some trades are excluded from the schemes, and some businesses sit close to the line without realising. If a substantial part of what you do looks like property, leasing, financial activities, or a few other excluded categories, HMRC will want to know the split before it can say yes.
The share terms
The shares have to be full-risk ordinary shares, not redeemable, carrying no special rights to the company's assets. If your articles or a draft shareholders' agreement suggest preference, a redemption right or any form of downside protection, expect a question about it. This one is often fixable, because it is a drafting problem rather than a problem with the business.
The investors
You will usually need to give details of your potential investors for HMRC to consider the application at all. If that part was thin, the question may simply be asking who is actually going to subscribe.
How To Answer
Treat the reply as the application you should have sent. Four things matter.
- Answer the question that was asked. Not the question you would rather answer, and not with a restatement of the pitch. If HMRC asked how the company will grow, the reply is about growth.
- Answer all of it at once. Because the team will not go back and forth, a partial reply that raises a fresh question is close to a refusal. Assume this is the only reply you get.
- Make the documents agree with each other. A common failure is a reply that contradicts the business plan, the forecast or the articles already on file. If answering properly means the forecast was wrong, send a corrected forecast and say so.
- Fix the thing, do not just describe it. If the problem is a redemption right in the articles, the persuasive answer is the amended articles, not an explanation of why the right is harmless.
Where founders go wrong. The instinct is to reply quickly and briefly to keep the raise moving. In practice a fast thin answer costs far more time than a slower complete one, because the next letter is a decision rather than another question.
What It Does To Your Timetable
A question resets your planning, and it is worth telling your investors that early rather than letting a date slip quietly. The application is not at the front of the queue any more, and the clock on the reply is yours, not HMRC's. If you are raising against a fixed close, this is the point to decide whether to move the date or proceed without assurance.
Our guide to how long SEIS and EIS advance assurance takes covers planning the raise around HMRC's timetable in more detail.
If The Answer Is Still No
A refusal is not the end of the raise. There is no right of appeal, but there are two routes left. You can submit a fresh application with the problem actually fixed, and there is no waiting period before you do. Or you can issue the shares anyway and test the position through the statutory route, because eligibility is properly determined when the compliance statement is submitted after the shares are issued, not at the assurance stage.
Which of those makes sense depends on what the refusal said and on whether your investors will proceed without assurance. We cover both in what to do when advance assurance is refused.
Common Questions
No. HMRC refuses either because it thinks the investment will not qualify or because it cannot reach a conclusion on the information given. A request for more information means you are in the second group, so the application is still open. What decides it is whether your reply closes the gap completely.
HMRC does not set a deadline in the way it does for a tax return, but the VCR team has said it will not enter into protracted correspondence, so treat the reply as your one remaining chance rather than the start of a discussion. Take the time to answer it fully.
No. Advance assurance is a non-statutory, discretionary service and there is no right of appeal against the VCR team's decision. Your options after a refusal are a fresh application with the problem fixed, or issuing the shares and testing eligibility through the compliance statement, where the statutory rules apply.
The risk-to-capital condition. HMRC has to be satisfied that the company aims to grow and develop its trade long term and that the investor's capital is genuinely at risk. Applications that read as low risk, asset backed, or built to return capital rather than grow attract this question most.
Usually not. An open application where HMRC has told you what it is unsure about is worth more than a fresh one, because you know exactly what to fix. Reapplying from scratch is the route once a refusal has actually been issued.
Had a letter from HMRC about your application?
We handle SEIS and EIS advance assurance and compliance on a fixed fee, including picking up applications that have come back with questions. Send us the letter and we will tell you straight what it is really asking and whether it is recoverable.
Book a free callChecked against HMRC guidance and the Venture Capital Schemes Manual on gov.uk on 21 September 2026. This is general information about the advance assurance process and not advice on your own application.