EIS/VCT restrictions

Cliona Kirby, Tax Partner, CMS

No surprises here ! After weeks of speculation the Government appear to have closed down a loophole which enabled you to circumvent the £2 million limit per EIS/VCT company by amalgamating funds through partnerships.  A new definition of small enterprise is proposed.  It appears that the Government view is that funding large projects with EIS monies intended to promote high risk start up companies is not within the spirit of the EIS/VCT reliefs.  Whilst there is little detail available rumour has it that such changes may be retrospective.  This is likely to make EIS/VCT investment less attractive which is a great shame given the proposed relaxation in some of the rules, for example, enabling companies to trade internationally

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