--- title: What to do if you have been trading for more than 7 years and want to issue EIS shares description: A guide on what your company can do if you wish to issue EIS shares, but do not satisfy HMRC's new qualifying trade requirement --- [Skip to content](https://help.seedlegals.com/en/4515022-what-to-do-if-you-have-been-trading-for-more-than-7-years-and-want-to-issue-eis-shares#main-content) English Show submenu for translations ![special-case-sl-logo.png\]](https://help.seedlegals.com/hs-fs/hubfs/special-case-sl-logo.png?width=165&height=18&name=special-case-sl-logo.png) - [Blog](https://seedlegals.com/resources/?nr=1) Open main navigation Close main navigation - [Blog](https://seedlegals.com/resources/?nr=1) - English Show submenu for translations - [Home](https://seedlegals.com/) [Home](https://seedlegals.com/) How can we help? - There are no suggestions because the search field is empty. 1. [Help Centre (UK)](https://help.seedlegals.com/en?hsLang=en) 2. [SEIS/EIS](https://help.seedlegals.com/en/seis-eis?hsLang=en) 3. [S/EIS Compliance](https://help.seedlegals.com/en/seis-eis?hsLang=en#s-eis-compliance) # What to do if you have been trading for more than 7 years and want to issue EIS shares ## A guide on what your company can do if you wish to issue EIS shares, but do not satisfy HMRC's new qualifying trade requirement When you are applying for Advance Assurance, HMRC will be checking that you fall into either a 3-year trading limit (if you are applying for SEIS), or a 7-year trading limit (if you are applying for EIS). This means that once you start trading, you will have 3 years to issue shares for SEIS relief, and 7 years to issue shares under EIS relief. This article will address what you can do if you are looking to issue EIS shares and you are past the 7-year trading limit. Depending on the situation of your company, you can rely on Condition A or B of [S.175A of the Income Tax Act 2007](https://www.legislation.gov.uk/ukpga/2007/3/section/175A)- these conditions provide a potential gateway to continue to issue EIS shares after the initial investing period. This may also apply if you are a new company, where the director of the company applying has also been a director of another company with the same business purpose/nature that has been trading for over 7 years. **What is Condition A and Condition B, and what is its purpose?** Under Condition A, the company can apply for EIS past the 7-year period, if 1\. they received a relevant investment before the end of the initial investing period, and 2\. that some or all of the money raised in that investment was used for a [qualifying business activity](https://help.seedlegals.com/en/2496261-is-your-business-a-seis-or-eis-qualifying-trade?hsLang=en), and 3\. the need for the follow-on funding was foreseen in the company’s business plan at the time the initial investment was planned. Point 3 is very important - it means that when you create the pitch deck and/or business plan for your initial SEIS/EIS Advance Assurance or Compliance, you need to explain in the business plan that you will need to continue raising investment ongoing. **This simple wording inclusion can be the difference 7 years later between being able to continue raising EIS past 7 years, and not being able to do so.** So, if you previously received SEIS/EIS investments that were used for one of the qualifying business activities, you will satisfy Condition A and can continue to issue EIS shares as long as you continue to meet other qualifying conditions. HMRC will require proof of this - for example, you will have to show your original business plan to ensure you are not an excluded activity, that the original business plan shows evidence that the company as well as evidence that the previous funds raised were used to grow this business within the 7-year period. If your company did not previously raise SEIS/EIS relief, we recommend that you have a look at Condition B. Condition B requires: (a) that the total amount of relevant investments made in the issuing company in a period of 30 consecutive days which includes the issue date is at least 50% of the average turnover amount, and (b) that the money raised by those investments is employed for the *purpose of entering a new product or geographical market.* Condition B recognises that exceptionally some companies may begin significant new business activities that are so different from their current business activities that their track record isn’t enough to attract potential investors. The investment must be made before the company embarks on the new business activities and the money raised cannot be used (or recycled for use) on any other business activities. Condition B gives companies that have surpassed the 7 year limit a gateway to issue EIS shares, if they can prove that the funds will be used for the purpose of entering a new product or geographical market. The legislation is intended to ensure that the State Aid provided through EIS is given to help companies access finance in their early stages, before they’ve established the sort of track record which will help them attract investors from the market. It’s anticipated that an older company that has been trading successfully should be able to attract finance from the market without State Aid. ​**How do you prove that you are entering a new product market or geographical market?** ​ Entering a new product market or a new geographic market is not the same as developing a new product or selling it somewhere different. Rather, it is about the type of market - you should focus on answering the following questions: Who are the customers in the new market? What type of customers are they? How are they different from the customers in the company’s existing market? How are the company’s competitors in the new market different from those in the existing market? How is the new geographic market different from the existing market? Is the company, broadly, selling the same sort of product to the same sort of customer in the same sort of area? Cases like these are judged on a case by case - the best way to address is by attaching a separate letter to HMRC detailing how the new company differs from the old one. Using these questions as a guideline, we can help you draft a letter as part of your application to prove that you are entering a new product market or geographical market. **What to do if you are KIC:** If you are a Knowledge Intensive Company, (KIC), the trading limit to receive EIS investment can go up 10 years, rather than 7 years. This 10 year period will begin with either the first relevant commercial sale, **OR** if the issuing company so elects, the date by reference to which that company is treated as reaching an annual turnover of £200,000. The company can then rely on Condition A and B to continue to issue EIS shares - again, an additional letter explaining the situation to HMRC will be a necessary part of the application, and we will provide support with this. If you are unsure whether you are a KIC please check out our guide on [what a Knowledge Intensive Company is](https://seedlegals.com/resources/what-is-a-knowledge-intensive-company-the-criteria/). If you do qualify as KIC you could then apply for your Advance Assurance and then issue shares within the 10 year limit outlined above. 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