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Alternative Market Briefing

EIS and VCT schemes sabotaged by EC negotiations accountancy firm claims

Thursday, March 22, 2012

Beverly Chandler, Opalesque London: Chilton Taylor, head of capital markets at accountancy firm Baker Tilly believes that any company which has received assurance that it qualifies for investment under the EIS or by VCTs which was given prior to 5 April 2012 should check that assurance still applies if investment is made after this date.

"As mentioned in the last budget the EIS annual investment limit will be increased from 6 April 2011 to £1 million ($1,583,927) per individual. The size limits on a qualifying company are raised to those with fewer than 250 employees and gross assets £15 million ($23,758,913) pre-investment with £16 million ($25,342,841) post investment, which has been subject to EU state-aid approval" Taylor says.

"But, in order to make the above palatable to the EU because this legislation falls within EIS State Aid provisions, the annual investment limit for a qualifying company will now be £5 million ($7,919,637) not the £10 million ($15,839,275) as said by the chancellor this time last year. More worryingly, we are told by HMRC that this £5 million ($7,919,637) annual limit additionally applies to funds deemed to have been raised by VCTs prior to 5 April 2007 which were previously 'protected’ from any annual investment limit and a beneficial source of funds to many growing companies". Further, the annual investment limit is also to be restricted by any other state aid risk capital obtained by a company such as stakes in the company by regional......................

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