After reviewing hundreds of valuation applications, the team has some tips on how to avoid the three most common mistakes.

1) Not having the right accounts or balance sheet

It’s really important to have the right set of accounts and a recent balance sheet or else HMRC might have some questions on your application.

For the accounts:

  • If you’ve been trading for 3 years or more, please provide the last three years’ worth of accounts

  • If you’ve been trading for less than 3 years, then provide what you have

  • If you are pre-revenue, no need for accounts

If your last filed accounts are older than 9 months, then also include your most recent management accounts

For the balance sheet:

  • The more recent, the better - we suggest within 1-2 months from today

  • If you’ve had a recent investment round, then the balance sheet must be from after that round

2) Scheme set up for Ordinary and not B Ordinary (Non-Voting)

Please note that schemes with Ordinary shares are riskier to submit to HMRC and have a higher chance of being questioned.

When you set up a new non-voting share class for EMI, it is a much stronger application and also you can get a much lower discount on your strike price.

To set up your scheme with B Ordinary (Non-Voting) shares, go to your option scheme set up and click the pencil button in the top right corner:

Then you can choose B Ordinary (Non-Voting) if you’ve already set up the share class in your cap table. Or, if you haven’t set up the share class, you can select Add new share class and choose the Employee share class.

3) Incorrect answers to these questions:

For the first question, please include share allotments that have occurred since your last company accounts were filed at Companies House.

These share allotments include investment rounds and other share issuances. Exclude share transfers.

The format should be: dd/mm/yyyy - x shares allotted for a price per share of £x.xx

The second question refers to any share transfers or share buybacks that have happened in the past year since the date of the application.

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