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LOOKING BEYOND BREXIT
Welcome to EIS Magazine’s annual
Yearbook for 2016/17. And what a
year it’s been. According to the EIS
Association’s recent letter to Prime
Minister Theresa May, EIS has
trebled its fundraising levels since
2011, with a record £1.6 billion
being raised during 2014/15, the
most recent year for which we have
firm data. And that in turn brings
the total of equity funding raised
since 1994 to more than £14 billion,
benefiting some 25,000 SMEs. Plus
another £400 million or so per
annum for venture capital trusts.
encounters between HMRC and the
so-called ‘Icebreaker’ providers which
had allegedly set up creative arts EIS
schemes designed primarily to avoid
tax, and which - in almost all cases,
as it turned out – had no commercial
purpose at all.
This sort of adverse publicity has done
the mainstream EIS sector no good
at all. Many parliamentarians, EISA’s
supporters claim, have a pretty pitiful
level of knowledge about EIS and
VCT - a survey by the Entrepreneurs
Network had highlighted that at least
a third of MPs had never even heard
of the Brexit vote. A great many
of the constraints on EIS and VCT
investment (such as the exclusion
of alternative energy projects) have
stemmed from Brussels. Would
this not be an excellent moment to
consider their removal?
“Much of the complexity imposed on
these schemes by Brussels needs
to be removed to enable these
growing companies to make their full
contribution to a vibrant UK economy.
Lifting most or all of these restrictions
would be a quick, simple and decisive
step in the right direction to getting
£5.3mn
2011 2014/15
£1.6bn
£14 BILLION
SINCE 1994
That’s a colossal result, whichever way
you look at it. But (have you noticed
that there’s always a ‘but’?), the
association has been on the warpath
to make sure that its voice gets heard
against the increasing din from a
turbulent parliamentary scene in the
aftermath of the Brexit vote. Mrs May
might have dumped George Osborne
from the chancellorship, but it’s not yet
entirely clear that his successor Philip
Hammond has been giving enough of
an ear to the concerns of the industry.
That needs to change.
Crackdown, Crackdown..
Instead, all we seem to be getting from
the Cabinet at present is the need to
‘crack down’ on rogue operators, and
to punish any adviser who proposes
a tax mitigation scheme that HMRC
might belatedly consider to have been
aggressive avoidance. That wouldn’t
have been such a cause for concern
(after all, 99% of EIS schemes are
utterly open and straightforward),
if only it hadn’t been for a series of
bruising and very public high court
of EIS or SEIS. And too many of those
who had heard of them had acquired
a negative view. That’s not a good
starting point.
The Fightback Starts Here
By the time you read this yearbook,
we should have got the first outlines
of the new report that Mrs May has
commissioned into the subject of
aggressive avoidance - and I want to
stress that every financial adviser has
an interest in keeping up with this
one, and in making his or her voice
heard. All the talk in high places about
hefty fines for advisers, solicitors
and accountants who propose what
are being (sometimes very loosely)
defined as aggressive schemes needs
to be met with a very determined
insistence that considerations of tax
efficiency are part and parcel of what
financial advisers do every day of
their lives.
Meanwhile, the EISA’s letter to the
Prime Minister makes another
very valid point in the aftermath
the UK economy performing, post-
Brexit. Such a move would be
welcomed by SMEs across the UK
and would also serve as a positive
demonstration that Brexit can bring
benefits, by unshackling business
from EU-imposed regulation that
hinders their growth.” - EISA
The EISA’s letter reasserts that “the
vibrancy and dynamism of SMEs is
one of the UK’s strongest economic
assets, and [that] the importance
of EIS and SEIS in incentivising
the provision of equity investment
for SMEs is likely to be ever more
important as we go forward. EIS is
about empowering entrepreneurial
companies by providing the
investment for them to prosper and
grow.” That means ending some of
the present funding constraints at this
pivotal point in history.
Michael Wilson
Editor in Chief
EIS Yearbook 2016/17
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