Partner Article

Government consultation for SME finance nearing close

A government consultation into investment boost plans for SMEs is nearing its close and businesses are being given a last chance to comment on the proposals.

The ‘tax advantaged venture capital schemes’ consultation looked into ways it could help small businesses, entrepreneurs and start-ups attract equity finance. This is a frequent problem for enterprises of this size.

The Enterprise Investment Scheme (EIS) and Venture Capital Trusts( VCTs) were set up in the 1990s, and have supported over £11.5billion of equity investment into UK businesses, but the government now wants to make it even easier for businesses to access finance.

The new proposals include raising the rate of EIS tax relief to 30 percent, increasing the annual EIS limit, and increasing the investment limits for individuals and companies.

Stephen Hall, tax partner believes that these small entrepreneurial businesses are tomorrows PLCs, and therefore we must support them through the difficult times.

He commented: “Accessing finance is the critical element in order to get any business venture up and running, but that is precisely what is proving so difficult to achieve at the moment.

“What we need is a catalyst to encourage investors to support these enterprises and that means working with the companies to produce realistic, credible business plans, as well as encouraging investors. A sensible way to do that in the current economic climate is to simplify the tax system and use it to encourage investment.”

Nonetheless, Stephen is warning companies against taking a “one size fits all” approach, because accessing capital markets can be a long and difficult process.

Stephen added: “ The most important thing any enterprise in the North East can do is to get a full and clear analysis of the right finance and investment model for their business.“

Following the end of the consultation period, legislation to implement any proposals to be taken forward will be published in a draft Finance Bill 2012 this autumn.

This was posted in Bdaily's Members' News section by Ruth Mitchell .