Apr 132016
 

A major political storm is brewing in Westminster as more revelations into the tax affairs of leading public figures have come to light.

It appears that many of these figures have salted away substantial sums of money in a trust structure that allows them to draw an income tax free, and with no capital gains tax to pay when they sell their investment. Furthermore, it looks as if the taxman is letting them get away with it.

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Apr 122016
 

Those of you who aren’t interested in Euro-law or compliance matters will probably be tempted to skip this article. While these are extremely important topics, I must confess, I too find substantive tax law more interesting. But instead of turning the page, I strongly suggest that you carry on reading. For these new rules aren’t confined to a single particular tax pigeonhole, but will affect a range of tax incentives such as the EIS and VCT Schemes.

In certain cases, failure to comply with the new rules may lead to a denial of the relevant tax break.

(This article can be downloaded in pdf format at Academia.edu)

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Nov 012015
 

Entrepreneurs have been taking a bit of a battering this year, with three Budget measures being introduced to stop them from using the relief in a way in which it wasn’t intended by the likes of HMRC (announced during the first Budget of 2015 and at the previous Autumn Statement 2014). So it’s a welcome change to be able to write about some good news.

This is about a measure concerning the deferral of CGT, known as reinvestment relief. A person who has incurred a capital gain on another asset can defer his tax liability by subscribing for shares or securities under the various Enterprise Investment Schemes. For two of these schemes a gain that qualified for entrepreneurs’ relief couldn’t be deferred unless the investor gave up his claim to the 10% rate and paid the higher rates when the tax was eventually due.

This will no longer be the case – one can now defer the gain AND benefit from the 10% rate. In other words, you can have your cake and eat it.

But one needs to tread with caution, as the legislation contains a small trap…

(This article can be downloaded in pdf format at Academia.edu.)

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Jul 022015
 

In this article we take a look at the Venture Capital Schemes and ask whether the risks involved are really worth it. In particular we see there are two types of risk – investment risk and tax risk. Investment risk can lose you money, but losing the tax reliefs is not necessarily fatal.

This article was first published on linkedin. Continue reading »

Jun 022015
 

I’ve finally managed to update that table! It wasn’t easy getting it all on one page. Last time there were only three Venture Capital Schemes, now there are four, with the addition of the Social Enterprise Scheme. Soon we shall have a fifth in the form of the Social VCT. Continue reading »

Budget 2015 – Changes to the Venture Capital Schemes and EU State Aid

 Investment Tax, Venture Capital Schemes  Comments Off on Budget 2015 – Changes to the Venture Capital Schemes and EU State Aid
Apr 222015
 

UPDATE

This article was written shortly before the Summer Budget of 2015. Since then, some of the measures have been modified and are now enacted in F(No 2)A 2015, together with the introduction of a new blanket prohibition on using the funds raised to acquire shares in another company. For VCTs this puts a damper on the practice of raising money to finance management buy-outs.

One of the announcements made during Budget 2015 was a series of measures aimed at tweaking the Venture Capital Schemes so that they are in line with EU State Aid rules.

There are four Venture Capital Schemes, though the rule changes affect just two of them, the Enterprise Investment Scheme (“EIS”), and the Venture Capital Trust Scheme (“VCT”). The other two schemes are the Seed Enterprise Investment Scheme (“SEIS”) and the Social investment Tax Relief Scheme (“SITR”) introduced last year. Continue reading »

Corporate Tax Groups – Special rules for Investment Trusts, VCTs and REITs

 CGT, Corporate Groups, Investment Trusts, REITs, Venture Capital Schemes  Comments Off on Corporate Tax Groups – Special rules for Investment Trusts, VCTs and REITs
Feb 262015
 

It has been a while since we last discussed corporate groups, and the notion of intra-group transfers. In this article we shall look at the rules as they apply to investment trusts, VCTs, REITs and other types of company that have a special tax status.

(This article can be downloaded in pdf format at Academia.edu.)

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Venture Capital Trusts Part Four – What does the investment portfolio look like?

 Investment Tax, Venture Capital Schemes  Comments Off on Venture Capital Trusts Part Four – What does the investment portfolio look like?
Sep 042014
 

This is the fourth in our series of articles on venture capital trusts.

(This article can be downloaded in pdf format in portrait or landscape version at Academia.edu.)

In this article, we shall be exploring the conditions that describe what the portfolio looks like “on the outside” – the rules governing the type of investments that can be made, the way in which the company’s income must be distributed, and how much of the portfolio must be invested in the riskier class of assets that are the basis of the Venture Capital Scheme.

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Jan 202014
 

This is the third in our series of articles on venture capital trusts. In this article we shall look at the conditions relating to the VCT itself. In particular, we shall look at the way the VCT is structured as opposed to the way in which the business is run, or the conditions attached to the investments in the underlying portfolio. These topics are the subject of future articles in this series.

(This article can be downloaded in pdf format in portrait or landscape version at Academia.edu.)

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Autumn Statement 2013 Venture Capital Trusts and Share Buybacks

 Tax Avoidance, Venture Capital Schemes  Comments Off on Autumn Statement 2013 Venture Capital Trusts and Share Buybacks
Dec 172013
 

New rules are being introduced to restrict upfront relief, where an investor sells his shares back to the VCT and uses the proceeds to subscribe for another shareholding. In this way, one can have a series of share subscriptions, each one giving rise to tax relief, but with no fresh money actually going into the system and finding its way towards the high growth companies that the VCT scheme is intended to benefit.

Rules to restrict upfront relief in a share buyback situation were first mooted in the Consultation Paper earlier this summer. We now have some draft legislation, so it is now possible to explore in more detail, just how these new rules will apply.

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