Our Tax Expert Group contributed to our response to HMRC's new guidance on Finance (No.2) Act 2015 Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) rules.
We generally supported the guidance as drafted and welcomed the inclusion of examples to explain how some of the new rules apply.
Whilst we noted the hard work done by the Inspectors within the Small Companies Enterprise Centre, in relation to venture capital schemes, we noted that the new rules placed a burden on many advance assurance applications. This has led to increased waiting times for responses and therefore placed additional burdens on companies seeking to raise financing for their businesses. We encouraged additional resources being directed into the department so that the service can enable venture capital schemes to support the small, growing companies that are vital to the UK economy.
We emphasised that venture capital schemes such as EIS and VCT should be targeted at growing companies, regardless of their age. We noted that a longer history of trading is not an impediment to growth, as opportunities may not have been previously available and the potential for growth may still be dependent on obtaining funding for longer established companies. Subsequently, the time limit imposed could exclude companies that would genuinely benefit from investment.
We supported the increased employee limit for qualifying knowledge-intensive companies to 500. With a number of our members – small and mid-size quoted companies – having close to 250 employees, we noted that this measure will have a beneficial impact on helping these companies raise equity finance and grow.