The Chancellor Philip Hammond today announced that HM Treasury would lead a review into the barriers preventing access to patient capital.

The announcement may potentially open the door to reversing some of the more restrictive new rules governing EIS and VCTs.

These changes, introduced in 2015 in order to comply with EU State Aid rules, include a seven year age limit on investee companies and a lifetime cap on how much investee companies can receive through these schemes.

Industry bodies such as the Enterprise Investment Scheme Association (EISA) and British Venture Capital Association (BVCA) have been lobbying government to get these changes amended, as they are thought to be unnecessarily restrictive, putting a brake on investment and growth.

“The announcement from Philip Hammond in the Autumn Statement proves there is some light at the end of the tunnel for our calls to remove the restrictive rules introduced in 2015. This won’t be a short process but this announcement proves all sides are working together for a mutually beneficial outcome. My understanding, having spoken to the Treasury today is that, the Treasury will be consulting on clarifying interpretations on many of the 2015 rules, particularly the Condition B rule. It’s also a victory for us to see a long overdue consultation on the Advance Assurance system which has largely dysfunctional for some time now.” Mark Brownridge, Director General, EISA

Clarifications for EIS and VCT Rules

The Treasury also announced that there would be further clarification and some technical changes to the rules that govern share conversions for EIS and follow-on funding for VCTs, responding positively to suggestions for improvements that have come from the tax efficient investment industry.

Furthermore, there will be a consultation on the EIS Advanced Assurance process, looking at options to improve the efficiency of the service.

Read the entire article on Intelligent Partnership here.




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