Many fast growth and tech businesses need to raise funds through equity share issues in order to take their business to the next level. The use of funds raised typically includes development of new technology, R&D, and investment in new markets.
If the business qualifies, investors are often keen to take advantage of Enterprise Investment Scheme or Seed Enterprise Investment Scheme tax relief. A reduction in Income Tax, deferral of Capital Gains Tax, potential Inheritance Tax Business Property Relief and future tax-free capital gains are all attractive and can make the investment decision easier.
A business seeking EIS or SEIS investment can currently apply to HMRC for advance assurance that the business qualifies. This gives greater certainty for the investor, and can help ensure all the money required is raised. However, it has been a struggle for HMRC to respond to all requests in reasonable time. The consultation seeks to address how the process can be improved. It will be great if this can be speeded up, whilst still giving businesses the assurance their investors are asking for.
HMRC is consulting on ways to streamline clearances for companies using the tax-advantaged venture capital schemes and EIS/SEIS, as the number of applications has increased threefold creating problems with service levels at the tax authority