HISTORY OF ENTERPRISE INVESTMENT SCHEMES
Today's Enterprise Investment Scheme is
a 'grandchild' of the Business Start-Up Scheme which was launched in 1981. In 1983, BSUS gave birth to the Business Expansion Scheme which was
designed to encourage private investors to provide venture capital for unquoted
companies, initially for a minimum of five years.
When the BES was introduced, the Government said
that the scheme was so simple “it was something that even Aunt Agatha could
The economic climate in 1983 was quite similar
to the current one, though for very different reasons. Then, as now, it was difficult
for entrepreneurs to access loan capital from banks.
The thinking behind BES
was to remedy this problem by giving tax incentives to investors who bought
shares in small trading companies. Providing long-term funds that would
otherwise have been unavailable was the principal aim of B.E.S.
When Sir Geoffrey Howe introduced the B.E.S. in
his 1983 Budget speech he said: - “These proposals
will transform the position of unquoted trading companies seeking outside equity. It is a further move towards removing the
bias in the tax system against the personal shareholder and a further measure
to encourage wider share ownership. By concentrating help on those companies which
do not have ready access to outside capital, the scheme will assist many more
small or medium companies to realise their undoubted potential for growth.”
As a scheme that offered up-front tax relief at the investor’s marginal rate, BES led to investment being made purely for tax reasons rather than sound business ones. In addition, the breadth of eligible investors and companies (notably residential properties) made the scheme highly attractive as a tax shelter. What had, in its early years, been a useful scheme attracting investment in unquoted trading firms, made only a modest contribution to such funding in its last five to six years.
BES was phased out 1993 in favour of Enterprise Investment Schemes.
In 1994, following the introduction of EIS, (originally announced in Nov 1993) Michael Portillo, then Chief
Secretary to the Treasury said:- “The purpose of Enterprise Investment Schemes is to recognise
that unquoted trading companies can often face considerable difficulties in realising
relatively small amounts of share capital. The new scheme is intended to
provide a well-targeted means for some of those problems to be overcome.”
No amount of tax 'sweetener' can turn a bad investment into a good one...only lessen the bitterness when it turns sour. Avoid having your tax relief withdrawn. Choose a company that understands and complies with complex E.I.S. regulations. Whilst there can be no pre-arranged agreement for realising mature EIS shares, it is some consolation to know that Accolade has a viable investor exit strategy.
*** Accolade Enterprise Investment Scheme is now closed to new investors ***
An Enterprise Investment Scheme is by far the best way of exploiting tax breaks
^-<-<- Use this Form or the 'Contact Us' page for more information about our EIS. Email a link to this page 'History of EIS'
Isle of Skye
Photo taken by Bill Gray,
Managing Director @ Accolade,
Sunday May 1st 2011
"He either fears his fate too much,
Or his deserts are small,
That puts it not unto the touch,
To win or lose it all."
Extract from 'My Dear and Only Love' written in 1643 by James Graham, Marquis of Montrose.
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