Why Flip to Delaware?
UK startups raising Series A+ from US venture capital firms (like Y Combinator, Andreessen Horowitz, or Sequoia) are often required to create a US parent company. This process is called the "Delaware Flip."
While great for fundraising, it creates a significant tax event with HMRC (His Majesty's Revenue and Customs). If handled incorrectly, your UK shareholders (including you) could face immediate capital gains tax, and your angel investors could lose their precious EIS/SEIS tax reliefs.
The 3 Pillars of a Safe UK Flip
HMRC Clearance
You must apply for clearance before the transaction to confirm that the share exchange is for commercial reasons (fundraising) and not tax avoidance.
Fiscal Valuation
HMRC requires a defensible valuation of the UK company to ensure the exchange happens at fair market value. This supports your clearance application and tax filings.
Section 431 Election
Founders and employees should typically file a Section 431 election within 14 days of acquiring the new US shares to avoid paying income tax on future value growth.
The Danger Zone: EIS/SEIS Relief
Do not upset your angel investors.
Your early investors likely invested under the Enterprise Investment Scheme (EIS) or Seed EIS (SEIS), which gives them massive tax breaks.
How a Bad Flip Kills Relief
If the new US parent company does not mirror the UK share structure exactly, or if the flip is deemed a "disposal" rather than a commercial exchange, investors lose their relief. They will have to pay back tax to HMRC, and they will blame you.
The QuantPillar Solution: Our valuation reports are designed to support your legal counsel's submission to HMRC, explicitly demonstrating the commercial nature and fair value of the exchange to protect these reliefs.
Partners for UK Founders
For UK Law Firms
We partner with top UK firms handling US expansions. We provide the Fiscal Valuation grunt work that supports your clearance letters and Share Purchase Agreements (SPAs).
For US VCs
Accelerate the flip. Don't let HMRC diligence drag on for months. Our express reports (48-72h) get the tax hurdle cleared so you can wire the funds.