EIS Magazine Issue 2

MARCH / APRIL 2015 ISSUE 02

www.eismagazine.comSupported by

EIS SEIS VCT SITR IHT BPR

The IFA Guide to Tax Eff ic ient Invest ing

AND IHT EFFICIENCYALTERNATIVE ENERGY AFTER APRIL

THE NEXT BIG THINGSEIS BPR

WHAT THE BUDGET MEANS FOR ALTERNATIVES

OSBORNES

CHANCE

3www.eismagazine.com March/April 2015

EIS Magazine is published by IFA Magazine Publications Limited, The Old Wheelwrights, Ham, Berkley, Gloucestershire GL13 9QHFull subscription details and eligibility criteria are available at www.eismagazine.com2015. All rights reserved.

Telephone: +44 (0)117 9089 686

Editor: Michael Wilson [email protected]

Publishing director: Alex Sullivan [email protected]

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EIS Magazine is for professional advisors only.Full subscription details and eligibility criteria are available at www.eismagazine.com

EIS Magazine is a trademark of IFA Magazine Publications Limited. No part of this publication may be reproduced or stored in any printed or electronic retrieval system wihtout prior permission. All material has been carefully checked for accuracy, but no responsibility can be accepted for inaccuracies, independent research and where necesary legal advice should be sought before acting on any information contained in this publication.

Upcoming Events

Tax Efficient Investing for HNW ClientsAn Adviser Seminar on EIS/VCT and BPR Investments from IFA Magazine and EIS Magazine

Tuesday 28th April 2015Bruntwood Tower, Manchester

Thursday 30th April 2015The Capital Club, London

Registration is freeFull details at http://tinyurl.com/k3gtmsxThese extended morning seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. CPD accredited. Lunch included.

WelcomeIt seems theres some kind of an election coming. Michael Wilson muses on the prospects for consumers, & for advisers too.

News in BriefOur monthly round-up of news stories. Keep sending us your news, please.

Adviser Checklist for AprilIngenious Media presents a last-minute guide to end-of-year tax efficiency.

Technology PerspectivesA look at two current projects from the McKinnons stable

IHT StrategiesDermot Campbell, MD at Kuber Ventures, explains how EIS investments can work within clients inheritance tax planning strategies

Open OffersOur monthly listing of whats currently available for subscription.

The Future of Alternative Energy InvestmentMichael Wilson talks to Claire Ainsworth, head of Triple Point, about the forthcoming changes to EIS fund eligibility.

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Venture Capital TrustsAnnabel Brodie-Smith from the Association of Investment Companies explains why VCTs are all the rage at the moment. And why they can offer a flexibility that even EIS cant always match.

Business Property ReliefTony Mud, Tax & Trusts specialist at St. Jamess Place, explores an option thats often overlooked.

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The SEIS RevolutionMichelle McGagh writes about the biggest trend of the moment. Dragons Den watchers, begin here.

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4WelcomeAs the air finally cleared in the House of Commons

after the Chancellors Spring Budget speech on 18th March, you could almost sense the relief among the assembled deputies. George Osborne had got to the end of his hour-long speech with a pretty neutral balance on the savings and investment side. An extension of the ISA contributions entitlement here, a cash incentive to first time home buyers there, and the usual strong of threats against tax-dodgers, both personal and corporate. As pre-election budgets go, it could have been worse.But there was more going on beneath the surface than seemed to meet the eye. For one thing, Mr Osborne had probably done the alternative investment market a power of good ironically, by making life harder for high net worth pension savers. By lowering the lifetime pension contribution cap from 1.25 million to just 1 million, with effect from 2016, the Chancellor was effectively increasing the pressure on HNW clients to seek out more and better ways of sheltering their cash from HMRC.The demand is already hefty. Just think about the number of venture capital trusts that have been able to close their offers ahead of schedule this year, because of the heavy demand from wealthier investors. Consider the fact that EIS investment is now running at record levels. Think about the huge expansion of activity in crowdfunding, some of it extending to clients who wouldnt normally have considered themselves high rollers in the past but who are starting to think about seed funding. (And who, in some cases, would possibly be better advised to stay away. But thats another story.)Changes to the EIS/VCT RegimeThere was more change buried in the many reams of printed detail. On the one hand, the Chancellor took the opportunity to spell out the future for what are being called Social Venture Capital

Trusts, a new type of vehicle which is still very much on the drawing board. On the other, he took action to align the whole alternative investment market with the European rules on state support to investment vehicles (see the following pages) with particular reference to EIS & VCTs. And in the process he raised some serious questions which will occupy the experts for some time to come. Suffice it to say that, though, that on the whole the new VCT and EIS rules are benevolent in their intention. Further proof of the Chancellors good intent can be seen in the way that he abolished the stupid rule that prevented SEIS companies from applying for EIS or VCT funding until they had spent at least 70% of the funds they had raised under SEIS.Renewable EnergyMr Osborne also took the chance to cast some welcome light on the powers of Socially Investment Tax Relief (SITR) vehicles, now that EIS schemes are being disbarred after April from investing in renewable energy projects. (The point here being that such schemes are already getting quite a lot of other financial incentives, so fairs fair.) But SITRs can still invest in community energy projects, some of which might look really quite similar to renewablesAll in all, then, wed be well off target if we thought the alternative investment sector had been untouched by the Budget. The changes are small, significant and generally timely. It seems unlikely that any of them will deflect the rampant demand from investors for these new investment products. EIS

Michael Wilson, Editor


Social Venture Capital Trusts The Chancellor also laid out the governments plans for so-called Social Venture Capital Trusts (Social VCTs), intended to increase participation in social investment among retail investors who want to invest smaller amounts than are generally needed for direct investment. Broadly, the new Social VCTs will be based closely on the existing VCT patterns, so as to maintain consistency across the tax system and to benefit from the existing familiarity among advisers. Social VCTs will have the same excluded activities as SITR.The government is to set the rate of income tax relief for investment in a Social VCT at 30%, subject to State aid clearance. Investors will pay no tax on dividends received from a Social VCT or capital gains tax on disposals of shares in Social VCTs. Officials will talk further to the sector about how the Social VCT will be delivered before proceeding to legislation in a future Finance Bill.

SEIS ChangesOther changes are less difficult to interpret. SEIS companies are being freed from the rule that says they must have spent at least 70% of the funds raised under SEIS before they can be considered for EIS or VCT funding. This measure ought to make it easier for companies to grow and progress smoothly.

Marketing SITR fundsMeanwhile the rules on the marketing of SITR funds are being relaxed. With effect on 13 April 2015, the present ban on directly advertising SITR funds to the public is to be abolished, with the proviso that the pattern should follow the promotion pattern of EIS funds.

News In BriefA Round up of the Latest Industry News

Meanwhile the government has clarified the situation around the new social investment tax relief (SITR) schemes and also the newly-mooted Social VCT schemes when they arrive. It is, of course, widely appreciated that EIS, SEIS and VCTs will be unable to invest in any renewable energy projects after 6th April. But the Chancellor has confirmed the expectation that SITR schemes will be able to invest in community energy generation projects. It will probably be clear that there is in fact some overlap and interplay

Budget Changes to VCTand EIS InvestmentsThe regulatory changes announced by the Chancellor to EIS, VCT and SEIS schemes on 18th March have been largely designed to ensure that they comply henceforth with the current European rules on state assistance for high growth companies. So far, so good.Most investors will never notice the impact of the new rules, because on the whole they tend to apply only to fairly extreme situations. That said, some of them may turn out to present certain difficulties which are likely to take some time to resolve.In effect, the Chancellor let it be known that EIS or VCT investment will henceforth be limited to companies

that were less than 12 years old when they received their first EIS or VCT investment - except where the investment would lead to a substantial change in the companys activity. What, exactly, did a substantial change in the companys activity mean? How substantial was substantial? And, not least would the new rules be applied retrospectively to investments that had already been made?Its an important point, because many VCTs and EIS schemes invest in companies much older than 12 years. Would they be disqualified? And if they were simply reversed into new vehicles, would that make them new for the purposes of the rules? It still remains to be clarified.

The Association of Investment Companies (AIC) responded positively to the Chancellors announcement. Ian Sayers, Chief Executive, said on 18th February that he welcomed the Governments commitment to secure the future of VCTs by ensuring that they gain European state aid clearance. And that the AIC would consider these proposed rules with our members and their managers and work constructively with the Government to secure the best possible outcome for the sector.

between sectors here: many if not most community energy schemes will be built around renewable energy. Whereas the majority of EIS renewable energy projects at present tend to revolve around larger and more technology-oriented projects.The government says it intends to allow a transitional period of 6 months following state aid clearance for the expansion of SITR before eligibility for EIS, SEIS and VCT is withdrawn. During that period, community schemes will be able to access EIS and VCT as before.

Renewable Energy

6 EIS Magazine March/April 2015

A Year End Checklist for AdvisersEdward Grant, an Investment Director in the Client Relationship Team at Ingenious Media, offers some timely thoughts

There are many tax year end checklists at this time of year, but few of them consider the full spectrum of solutions available.With major pension changes coming into effect from 6 April 2015 and the possibility of investors having their personal allowance in the 2014/15 tax year reduced to nil, based on an adjusted net income of 120,000, income tax and retirement planning should both remain key focuses.As the tax year end fast approaches, it is not too late for investors to make the most of allowances, exemptions and reliefs available, so now is the time to consider the following strategies: Using pension contributions to reduce adjusted net income and reduce the higher or additional rate tax liability or, where adjusted net income is between 50,000 and 60,000, the impact of the Higher Income Child Benefit Tax Charge Utilising the New ISA 15,000 contribution limit for 2014/15, which maintains a tax free return for future years Where an estate is liable to inheritance tax (IHT), the 3,000 annual exemption is available for gifts of up to 3,000 for the current tax year. Any remaining annual exemption can be carried over from each tax year to the next, but the maximum exemption is 6,000. This is a use it or lose it exemption and therefore, combined, a married couple could have a maximum of 12,000 annual exemption if they have not yet used the previous years allowance Taking advantage of the capital gains tax (CGT) annual exemption of 11,000

Clients who have capital gains in excess of their annual exemption arising in the 2014/15 tax year can defer the CGT liability by investing their gain into an Enterprise Investment Scheme (EIS) qualifying investment within 3 years of or 1 year prior to the gain arisingo In addition, if an investor has a UK income tax liability, then they could claim income tax relief of 30% against their 2014/15 tax liability, up to 1 million, by investing into EIS qualifying companies EIS income tax relief can be claimed in the tax year in which the investment is made, or carried back to the preceding tax year. As such, if an EIS investment is made in 2014/15 tax year, the 30% income tax credit can be offset against your 2014/15 tax liability and/or your 2013/14 tax liability For individuals that already know an income tax liability will arise in the 2015/16 tax year, an investment can be made into Ingenious Path Plus Film EIS, as shares in these EIS qualifying companies will be allotted after the end of the 2014/15 tax year endSince being launched in 1994, the EIS has grown considerably as a retail solution. With a relatively accessible entry point of a 10,000 minimum investment, the EIS now raises in excess of 1 billion a year.

The seed enterprise investment scheme (SEIS) has remained a relatively niche investment since its launch three years ago, but it offers generous tax breaks for clients with the right risk tolerance. Originally announced in the Chancellors 2011 Autumn Statement, they were finally launched in 2012 as a way to help small and early stage start-up businesses and ultimately to boost the UK economy during the long exit from the financial crisis. Three years down the line, the SEIS sector is making strong headway and, as well see, the 2015 Budget statement brought an important change in the way that SEIS companies can graduate to EIS or VCT status. The Tax BreaksBased on the long-established enterprise investment scheme (EIS), SEIS offers even greater tax benefits for investors willing to take a risk on start-up companies. Its no exaggeration to say that, in creating

Seed Investing

Investors receive an attractive initial income tax relief of 50%

SEIS, the UK government has created the most generous investment scheme in the world offering both income and capital gains reliefs, as well as downside protection for shielding investors in the event of failure.The original introduction of SEIS formed part of a wider shake-up of tax incentivised investment plans such as EIS and venture capital trusts (VCT). HM Revenue & Customs (HMRC) said at the time that SEIS was intended to recognise the particular difficulties which very early stage companies face in attracting investment by offering tax relief at a higher rate than that offered by EIS.Income TaxInvestors receive an attractive initial income tax relief of 50% on

investments, regardless of the income tax rate they pay, up to the 100,000 maximum that can be invested each tax year but the shares in the company have to be held for at least three years to qualify for the relief. This 100,000 can be spread over a number of companies but cannot be invested in just one company. A company can raise no more than 150,000 a year from SEIS, and investors cannot control the company receiving their money and cannot hold more than a 30% stake in any company in which they invest. An investor can, however, be a director of the company they want to invest in but not an employee.There are a number of factors that companies have to satisfy in order to qualify for SEIS. Companies must be

TO QUALIFY FOR SEIS,COMPANIES MUST

LESS THAN 200,000 ASSETS

FEWER THAN 25

EMPLOYEES

MUST BE BASED IN THE

UK

BE NO MORE THAN TWO YEARS OLD

HAVE A PERMANENT ESTABLISHMENT IN THE BRITISH ISLES

Michelle McGagh discusses the advantages, the tax breaks and the potential pitfalls of a fast-growing investment sector

SEIS

7www.eis.magazine.com March/April 2015


Seed Investing

previous year up to a maximum of 100,000.Initial Take-upFigures illustrating the take-up of SEIS are limited, due to the infancy of the investment scheme. The only figures available from HMRC, published in December 2014, provide a snapshot of the number of companies that have benefitted from SEIS and the types of investors placing money through the scheme.

In the first year around 1,100 companies benefited from over 80 million invested through SEIS. The hi-tech sector received the most money, according to HMRC, taking a 32% share of the 80 million. The business service sector took second place with 22% invested and the distribution, restaurants and catering sector came in third with 14% of the total sum invested in this area. A total of 5,000 investors claimed income tax relief on self assessment forums under SEIS in 2012/13 and the majority, 63%, claiming relief invested less than 20,000 into companies. RiskWhile SEIS may be the preserve of higher-net-worth investors, it would seem they are tentative about investing too much through the scheme as investments of 20,000 or less made up 70% of the total raised through the schemes.Those investing 50,000 or less contributed 86% of the 80 million raised by SEIS in 2012/13. Sarah Wadham, Director General of the Enterprise Investment Scheme Association (EISA), which is the trade body for both EIS and SEIS promoters, said at the outset that the risky nature of SEIS investment meant that the schemes would remain small and niche. However, recent changes to the rules has made it more attractive for investors to invest in early-stage companies through SEIS. Previously, companies that were using SEIS were not allowed to apply for EIS status, through which a larger sum of money can be raised, until they had finished using at least 70% of the cash raised through SEIS.

based in the UK and have a permanent establishment in the British Isles. They must also have fewer than 25 employees, be no more than two years old, and have assets of less than 200,000.The company also has to be part of an approved sector, where the government wants to kick-start entrepreneurship - which does not include the financial and investment sector or property sector. Capital Gains TaxIt is not just relief on income that SEIS offers, but exemptions on capital gains tax (CGT) too. If shares are held for three years or more, there is no CGT to pay, and no inheritance tax (IHT) liability. There is also an additional relief that can be claimed called capital gains reinvestment relief.

In the first year around 1,100 companies benefited from over 80 million invested through SEIS

How Loss Relief Works

The benefits of can be illustrated by an investor paying 45% additional rate income tax and 28% CGT, investing 10,000.In the first scenario, the company is successful and the investment doubles in value to 20,000. The investor receives 50%, or 5,000 in income tax relief. As the investor has held the shares for three years or more there is also no CGT to pay on the 10,000 growth, meaning the tax-free return on the 10,000 investment is 15,000.In the second scenario, if the shares in the company are still 10,000 at the end of three years, the investor has still realised a 5,000 reduction in their income tax bill.In the third case, the company fails and the shares become worthless. The investor has already received 5,000 of their 10,000 investment back in income tax relief. They then receive loss relief equal to 45% of their at risk capital, totalling 2,250, meaning their actual loss is just 2,750.

If an investor has paid CGT on other investments, up to 50% of the tax paid can be claimed back if the money is reinvested in a qualifying SEIS in the same tax year. Reinvestment relief was originally intended to be a temporary measure, available in the tax year 2012/13, but it was made a permanent feature of SEIS by chancellor George Osborne in his 2014 Budget. Loss ReliefIf the company invested in goes bankrupt - which start-ups are more likely to do any losses can be offset against either income or capital. Investors can claim loss relief on the amount they invested equal to half of their total investment multiplied by either their income tax or CGT rate.

Carry Back There is the option to carry back SEIS tax relief to the previous year by electing all of some of the shares purchased in the current tax year to be treated as though acquired in the


Seed Investing

Now, companies will be allowed to apply for EIS status and therefore raise more money, more quickly, before finishing their SEIS cash, says Wadham. (See also our News report on Page 5 for more details of how the 70% requirement has now been abolished.)

Before, you had to finish your SEIS money before you could raise EIS money, but now people are doing funding for both together, so the first [investors] get SEIS tax breaks and then continue to get EIS [tax breaks] the more [money is invested], she says. You can grow your investment as the company grows. There are better tax breaks early on when it is more risky and [the tax breaks are] less good when it gets bigger, even though through EIS they are still generous.Wadham says that the changes to the rules have been welcomed, as the small sums raised by SEIS a maximum of 150,000 were typically to create demo products which then allow companies to progress to EIS and raise more money.

Companies use a hybrid [of SEIS and EIS], she says. They do SEIS first and then more on to EIS because SEIS is just too small.

SEIS is not just small, it is also very risky, and Wadham says it is only suited to sophisticated, high-net-worth investors. In her experience, Wadham says, she has found that advisers are generally better off putting clients into EIS than SEIS. But SEIS is something they should definitely know about, she says.Crowdfunding IssuesThe increased popularity of crowdfunding is one avenue through which clients may learn about SEIS. Crowdfunding platforms use SEIS to pool investors money while offering tax breaks for investing in fledgling businesses.There are currently 35 crowdfunding platforms in the UK, and the equity element of the crowdfunding market is worth over 50 million thats distinct from the peer-to-peer lending part of

the crowdfunding market, of course. However, Wadham believes that crowdfunding is too specialist an area for advisers to get too involved in, and that it should be left to angel investors. This concern has also been flagged by the Financial Conduct Authority, which has tightened its rules around who is allowed to invest via crowdfunding. Rather sternly, the regulator reminds us that most investments in start-up businesses result in a 100% loss of investment, and that between 50% and 70% of new businesses fail in the early years.

Advisers are wary enough about recommending EIS so they will be even more wary about recommending [SEIS through] crowdfunding, she says. SEIS will remain small and nichebecause it is so risky and advisers need to protect their backs when it comes to [client] suitability. EIS

Crowdfunding platforms use SEIS to pool investors money

while offering tax breaks for investing in fledgling businesses

Amati VCTs Top Up Offers 2014/2015 and 2015/2016

Finely crafted investments

Amati has one of the mostexperienced UK smallercompany investment teams, aclear investment process, and adisciplined approach to riskmanagement

Dr Brian Moretta Analyst, Hardman &Co

Risk WarningAmati Global Investors Limited recommends that potential investors seek independent financial advice prior to investing in a Venture Capital Trust (VCT). Investment in a VCT carries a higherrisk than many other forms of investment. For more information relating to risks, please see the Risk Factors section in the Amati VCTs Top Up Offers Document 2014/2015 and 2015/2016 relatingto the companies and offers for subscriptions. In particular, potential investors should be aware that their capital is at risk and that they might get back less than their original investment; the valueof tax reliefs depends on the individual circumstances of each investor and may be subject to change in future; investors must hold their shares for at least five years to qualify for income tax relief;the availability of tax reliefs depends on the companies invested in maintaining their qualifying status; and, there can be no certainty that either VCT will achieve its intended level of investment inqualifying investments. THIS ADVERT IS A FINANCIAL PROMOTION WHICH HAS BEEN APPROVED BY AMATI GLOBAL INVESTORS LTD. INVESTORS SHOULD NOT SUBSCRIBE FOR SHARES IN AMATI VCTPLC AND AMATI VCT 2 PLC REFERRED TO IN THIS ADVERT EXCEPT ON THE BASIS OF INFORMATION IN THE AMATI VCTS TOP UP OFFERS 2014/2015 AND 2015/2016 DOCUMENTWHICH ALSO CONTAINS INFORMATION ON FEES AND CHARGES APPLICABLE.Amati Global Investors Ltd is authorised and regulated by the FCA with registered number 198024.

Amati also manages the TB Amati UKSmaller Companies Fund and offers anAIM IHT Portfolio Service

A hard copy of the Amati VCTs Top Up Offers Documentis available from fund platforms, financial advisers or can be downloaded from www.amatiglobal.com, byemailing [email protected] or by calling 0131 503 9115.

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Last Call for Alternative Energy EISAs the opportunities for EIS investing in alternative energy fade into the sunset, Mackinnon are shortly to close their X-Wind offering

Mackinnons 2 million offering for its X-Wind project, which has been open since January, will sadly be closing the funds doors on 31st March ahead of the new regulations on EIS eligibility for renewable energy. Established in 1997 by Iain Mackinnon, the company specialises in Corporate Finance Advisory, Wealth Management and merchant banking with particular expertise in the renewable energy and health sectors. X-WindX-Wind, says Mackinnon, has developed a ground-breaking Vertical Axis Wind Turbine aimed at the medium scale renewable energy sector. The team has drawn on its extensive experience gained developing the worlds largest wind turbines at Vestas. Since its launch in 2012 X-Winds core patented technology has won five high-profile technology awards.X-Winds visible sales pipeline, according to Mackinnons, exceeds 40 million, and the company is also securing commercial commitments for its 80kW turbines from customers in need to secure energy pricing and supply. X-Wind has secured a partnership with the UKs largest electricity user. To date X-Wind has raised 1.7 million in grants and 0.3M of equity. X-Wind currently requires 2.0M of equity funding to complete the production of their first full-scale 80kW turbine.

Barts Health Open OfferingMackinnons is also operating with portfolio company Peto Limited, a marketplace for the Public Sector, in respect of an offering in respect of Barts Health. Peto was appointed in September 2014 to support the Trust in the delivery of savings from the off-contract spend of around 38 million per year. Three months into service delivery, the company was able to report that the Peto team were achieving 12% realised savings against a target of 4% on prior spend. This is a strong result, says Mackinnons, and reinforced by huge opportunity to increase the scope of the throughput which has been lower than forecast to date. We are thrilled with the results we are achieving at Barts,

says Peto Chief Executive Julian Trent, and we look forward to collaborating with the team to achieve even greater savings in the future. Active in over 200 NHS trusts, Peto connects public sector buyers and private sector sellers via an easy-to-use online marketplace, and where necessary, with additional resources to reduce spend via its insourcing procurement service. EIS


Venture Capital TrustsAnnabel Brodie-Smith, Communications Director, Association of Investment Companies

Venture Capital Trusts (VCTs) have been celebrating an important birthday: its now twenty years since VCTs were launched. The sector has matured with strong performance and assets close to their record level, at 3.2bn of assets. VCTs have had a strong year, with the average VCT up 6% and the average Generalist VCT up 8%. The good news is that VCT managers in our latest survey reported a positive year, with managers overwhelmingly finding a good flow of investment opportunities and some companies even enhancing their investment teams accordingly. So what are VCTs and how would you go about selecting a VCT for your clients?VCTs in many ways are like other investment companies. They are companies listed on the stock exchange, investing in a diversified portfolio of investments managed by a professional investor. However, they must invest 70% of their portfolio in up and coming businesses or in AIM shares. These investments must be in companies which are below 15m in size at the time of the investment. To compensate

your clients for the extra risks of investing in smaller companies there are tax benefits. Your clients will pay no income tax on any dividends you receive, and no capital gains tax on any profits you make when you sell your shares. These reliefs are available at all times, irrespective of how much you invest, how you buy the shares or how long you hold them. However, if you buy shares on the launch of a VCT or when it raises new money, then you receive 30% tax relief to reduce your income tax bill, providing you hold the shares for a minimum of five years and subject to certain conditions. This is known as initial or upfront income tax relief.When looking at VCTs there are three main sectors as defined by the AIC - the Generalist sector, the AIM Quoted sector and the Sector Specialists. As the name of the Generalist sector suggests, these VCTs invests in a range of investments in different sectors. The VCT AIM Quoted sector includes companies whose policy is to invest in a range of qualifying companies listed or about to be listed on AIM or on any other exchange where the securities are treated


as unquoted. This sector offers advisers a route into these listed companies which are not eligible through EIS. Then there are the Sector Specialists which include Healthcare & Biotechnology, Environmental, Infrastructure, Media, Leisure & Events and Technology. There is a host of data for researching VCTs in these sectors on the AIC website www.theaic.co.uk, including performance and NAV data, yield and ongoing charges.Of course, VCTs do not just have investment benefits for their investors. VCT investment can have a tangible impact on the businesses they invest in. Some very well-known and successful consumer brand companies are supported by VCTs, such as Secret Escapes and Zoopla, backed by Titan VCT at Octopus Investments. However, its striking how diverse the companies VCTs invest in are. They range from a fertility clinic, CREATE Fertility, where a 5m investment from Livingbridge has facilitated the opening of

a flagship clinic in central London, to the good old fashioned British pub. Brewhouse & Kitchen, backed by Puma VCTs,

have successfully expanded their number of pubs and microbreweries.

Some VCTs are helping save lives through their investment in healthcare technology. For example, Albion Ventures invests in Dysis, a company that developed a gold standard technology to detect cervical cancer. This technology has been used to scan 30,000 patients and has improved cervical cancer detection rates. Elsewhere, in the media sector, Edge VCTs are backing Mirriad, a video advertising solution for the skip generation, those


Some VCTs are helping save lives through their investment in healthcare technology

AVERAGE VCTGROWTH 2014

ASSETS GENERALIST VCTGROWTH 2014

6% 8%3.2BILLION

14 EIS Magazine March 2015

of us who watch TV shows or videos online and skip the advertisements. Mirriad places the advertised products into the TV shows content subtly and seamlessly, so for the viewers, there are no interruptions to the programme but the advertised products reach the target audience and create a new revenue stream.

With the economy currently thriving, its not surprising that there is currently a lot of confidence within the industry. Confidence in deals is flagged by Mark Wignall, Managing Partner at Mobeus Equity Partners, who said:

The Mobeus VCTs have been investing in excess of 30 million for each of the past two years. Current deals in progress suggest that the 2015 figure will be higher. Bill Nixon, Managing Partner of Maven Capital Partners, manager of the Maven VCTs, is also positive:

Weve just successfully closed another top-up fundraising, having raised around 40m in the past 15 months from investors keen to access the strong tax-free returns from VCTs, and have invested in 17 profitable UK companies across a range of sectors in the past 2 years.

The uncertainty that the approaching election brings is an issue for the industry, but VCTs do not seem unduly concerned. Dr Paul Jourdan, CEO of Amati Global Investors, comments: Mays general election injects uncertainty into the

investment outlook for 2015. However, the kinds of small companies we look to hold in the Amati VCTs are mostly focussed on specific growth niches, which can prove resilient in the absence of a major setback. David Hall, Managing Director, YFM Private Equity, is of the view that SME confidence has not been affected by the forthcoming election. He states:

Strong demand for investment finance has continued in 2015 from the previous year. SME confidence has remained high reflecting overall UK performance; we have seen no tailing off pre-election. So, twenty years on since VCTs were launched, the oldest existing VCTs in the sector are Baronsmead VCT and Northern Venture Trust and they are still thriving today. Interestingly, some 1,000 at launch invested in these companies would have grown to 3,549 and 4,031 respectively in share price total return terms. Their investors certainly have something to celebrate. If youre interested in finding out more about VCTs, we have produced a new guide to help your clients understand more about VCTs. Theres also a series of videos that bring the impact of VCT investment to life, and the AICs extensive data on VCT members available at www.theaic.co.uk. EIS

Venture Capital Trusts

The uncertainty that the approaching election brings is an issue for the industry, but VCTs do not seem unduly concerned

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Venture ForthDermot Campbell, MD at Kuber Ventures, explains how EIS investments can work within clients inheritance tax planning strategies

One of the most generous tax incentives out there is unquestionably the Enterprise Investment Scheme or EIS

What does investing in Enterprise Investment Schemes (EIS) really involve and can IFAs truly be independent if, as a government endorsed tax-planning solution EIS is not considered due to a lack of knowledge and misconception? Dermot Campbell, MD of independent Multi-Manager EIS Platform Kuber Ventures, talks about the key to using EIS in estate planning and dispels some of the myths associated with this route of tax-efficient investing. The Government has thrown everything it can think of to encourage money to be invested in small to medium sized businesses. One of the most generous tax incentives out there is unquestionably the Enterprise Investment Schemes or EIS.For clients who want to maximise the amount they pass on to their successors, but still want to retain control, it doesnt get much better, however, be warned, you need to get the financial planning right.

What is the Key Benefit to EIS in an Estate Planning Context?There are 2 relevant reliefs that apply to Estate Planning: Business Relief, which was formally called Business Property Relief & Replacement Property Relief. You get 100% Business Relief (BR) against an estate for qualifying property which includes a business or interest in a business or shares in an unlisted company. There are a few exceptions such as companies which deal in shares or land but all EIS investments should qualify for BR.Business Relief is only relevant if you die and to qualify you must have owned qualifying property for at least 2 years before your death. Where you have a portfolio of investments which qualify for BR and part of the portfolio is in cash, the cash element will not qualify for BRIf you sell a BR qualifying asset and the proceeds are reinvested in an alternative qualifying asset, within 3 years of

disposing of the original asset, then this new property may be treated as Replacement Property. Your estate will be able to treat the ownership period of the first property towards the 2 year qualifying period for Business Relief. Care needs to be taken here, because the HMRC guidelines state that you need to re-invest the entire proceeds in Replacement Property, suggesting that if you sell an asset for say 10,000, spend 2,000 on a Holiday and invest the remaining 8,000, then the new property may not qualify as Replacement Property. It is worth contacting HMRC for guidance if you are considering investing clients funds in Replacement Property. Types of Client for Whom EIS is SuitableThe starting point here is that the client should generally be High Net Worth within the FCA definition. The FCA defines HNW as someone with at least 250,000 of assets excluding principle residence, pensions and a few other things, or an income over 100k.There are circumstance when recommendations have been made to clients below the HNW threshold which are appropriate, however, if you work on the principle that for a less wealthy client, it is sensible to keep EIS to below 10% of their investments, then a client with slightly below the threshold would only be able to invest 25,000.Clients also need to be a tax payer; i.e. they should pay income tax or have incurred a capital gain within the last 3 years. EIS investments benefit from tax free gains providing the investor claims at least 1 of income tax relief on each EIS investment and it is probably fair to say that if they are not paying income tax, then you shouldnt recommend an EIS, although as always, there are exceptions to this.The perfect EIS investor from a tax perspective pays income tax at higher rates and is likely to continue to do so into the future; they have incurred a capital gain in the recent past; and


10 investments - 100 eachTotal investment 1,00

Initial investment

Net profit (loss)

Total return post tax

1 investment fails 100 (42) 582 lose 30% of initial investment 200 0 2004 break even 400 120 5202 return 1.3 x investment 200 120 3201 returns 5x money 100 430 530Total return 1000 631.50 1,628

they have an estate which is likely to be subject to Inheritance Tax. For these clients, if they die having owned shares in an EIS for at least 2 years, then the tax relief alone will be worth nearly 75p in the 1 assuming the assets returns its value and the tax relief is held in cash at death. These investors will be able to gain maximum advantage from loss relief should the investment return less than 70p in the 1.The key here is building a well diversified portfolio and looking for 3 in 30 investment to outperform. Loss relief will cap losses of the disappointing investments at 38.5p while the gains on the successful investments will be tax free.Very close behind perfect EIS investors are clients who are higher rate tax payers with no CGT liability: EIS is extremely attractive for these investors too.These investors are often well suited to private equity style EIS because the loss relief will protect the downside for them. The table illustrates the power of loss relief for a 40% tax payer.Investors who are likely to be basic rate tax payers in the future still enjoy very generous tax reliefs using EIS. Loss relief will be of less value for these clients so focusing more on the asset or income focused investments. With these investments, the likelihood of needing to use loss relief is lower.There are a number of EIS funds available which invest in companies which own physical assets (e.g. pubs), or have contractual rights to secure income streams. Whereas these investment are unlikely to deliver the same returns as private equity style EIS funds, the risk of a return below 70p per 1 invested is less likely. (30% tax relief + 70% investment recoupment = 100% recoupment). It is still important to diversify across strategies to reduce risk so a portfolio approach is essential.

Suitability ConsiderationsI recently conducted some analysis into Financial Ombudsman decisions relating to EIS. The Financial Ombudsman Service website publishes decisions going back to 1 January 2012. There are a whopping 6,260 complaints over the period 01.01.2012 06.03.1 made on the general filter option of Investments and Pensions. 2,104 of these complaints were upheld by the Ombudsman. Encouragingly, only 18 of these cases related to EIS of which 12 were upheld. Of those that were upheld, several can be viewed as not particularly specific to EIS as they related to poor service, however, there were some important lessons to be learnt. There are some helpful comments within the reports:

Responsibility for the investment choices within the EIS lay with the EIS provider rather than [the adviser]. Since [the Adviser] was not responsible for those investment choices, I did not consider whether they were properly made because I would not uphold the complaint against [the Adviser] even if they were not.

Mrs V could afford to invest the sum she invested into the EIS. That money was a relatively small proportion of her overall wealth, and she could afford to accept higher risks with it if she wanted to. She was aware from the outset that the EIS was higher risk than her other investments.

An investors age is relevant to the amount of risk they are able and willing to take, but it is rarely the only factor. Some elderly investors are happy to take extremely high risks. Some young investors are unwilling to take any risks at all. In Mrs Vs case, I did not agree that her age meant the EIS was automatically unsuitable.There were a number of issues that the reports did highlight: in several cases, EIS was simply recommended because it had IHT benefits, however the clients left the investment to their spouse which was an IHT exempt transfer and EIS relief was irrelevant. The key takeaway here is that you need to do more than just recommend a product you need to actually make some proper planning recommendations which fully address the clients problems.In another of the cases the clients spouse had recently died and an EIS was recommended as a means of reducing IHT. The adviser forgot to take into account the deceased spouses nil rate band in calculating the potential IHT liabilityLiquidity is also a fairly obvious planning consideration. In one of the upheld cases by the FOS, the adviser recommended an EIS to a youngish client who was saving up for a house in a few years time, but left the client with no liquiditySumming up

EIS is a fantastic financial planning tool which offers exceptionally generous tax benefits. When advising clients on inheritance tax planning, it is not something you can ignore. That said, equally, EIS is considered to be a high risk investment by the FOS and as such there are certain things that you need to remember to account for.A last thought: when you look at types of risk within an EIS, it is the stock specific risk that is most relevant and systemic risk is less of an issue. EIS


IHT can have significant implications for clients and their families, and the variation in personal circumstances, needs and motivations can make planning a demanding area. BPR arrangements have a significant part to play and the following are examples of just how valuable such solutions can be.Elderly Clients or Those in Poor HealthMany estate planning solutions either require a client to survive a period of seven years, or, rely on them being able to arrange life assurance. For the elderly, or clients in poor health, the fact that planning involving BPR is affective within two years and does not require underwriting, can be of significant value. This aspect can be further enhanced where the advisor is dealing with a couple who may both be elderly and/or infirm. On the assumption their wills pass any BPR assets to each other on first death, and then just one of the couple survive a period of two years, the exemption will be available on the entire investment irrespective of who dies first. Finally, if a client has sold assets qualifying for BPR within the last three years - perhaps a business or qualifying AIM shares - a sum equal to the proceeds could be invested, and in this way, requalify immediately without the usual two year qualifying period.Attorneys and DeputiesWhen an individual loses mental capacity their financial affairs will be dealt with either by an Attorney or

BPR & Tax PlanningTony Mud, Tax & Trusts specialist at St. Jamess Place, explores an option thats often overlooked

a Court Appointed Deputy. In these circumstances significant limitations are imposed in relation to lifetime gifts (for Attorneys, Section 12 of the Mental Capacity Act 2005). Similar limitations are normally placed upon Deputies and while it is possible under a Continuing Power of Attorney in Scotland, for them to be given the power to make gifts, it is still unusual. As the individual who has lost capacity cannot therefore make gifts either out right or into trust; directly or via his Attorney/Deputy, the

Mrs A is 87, has a significant estate but suffers from Vascular Dementia. She is incapable of looking after her own affairs. She qualifies for NHS continuing care, and consequently does not have to contribute to the cost of her care fees. Her son and daughter, who are her sole beneficiaries, hold a Lasting Power of Attorney. They are concerned about the IHT liability on their mothers estate and would like to undertake some planning. They are aware that as their mother has lost capacity, their IHT options are restricted as their powers as Attorneys do not extend to making substantial gifts.

Keen to avoid an application to the Court of Protection (a costly and time consuming exercise) which may permit them to engage in a strategy of gifting, they elect to invest in a BPR product. After two years this provides 100% IHT relief and importantly the assets remain registered in Mrs As name i.e. there has been no gift.

Business property relief (BPR) solutions have, and continue, to evolve with investment options designed to cater for a variety of client requirements; including varying levels of risk and return. When it comes to tax planning however, there are a number of benefits common to the vast majority of the solutions on offer. These include:

Speed of IHT relief Access and control BPR falling outside of the nil rate band Transfers between spouses do not reset the two year qualification period

Replacement rules preserve BPR qualifying status, provided proceed of qualifying investments are replaced within three years.Inheritance tax (IHT) can be a complex issue with personal, political, economic and indeed emotional implications, making it an area that many clients struggle to get to grips with.


Inheritance Tax (IHT) can be a complex issue with personal, political, economic and indeed emotional implications

ability to make an investment that will become exempt from IHT after two years, can often be the only solution.Combining BPR and TrustsIt is a fairly common scenario; both husband and wife are on their second marriages, both with children from their first marriage and with separate finances. While they may have agreed that their own money will be passed to their own children upon their death, one partner may have a much higher income so want to ensure that their spouse receives sufficient financial support, in the event of his or her own death.The simple solution to this situation is to leave the income from the richer partners capital to their spouse in their will. Then, on second partners death, the capital is to be distributed to the first partners children from the first marriage. This is an immediate post death interest trust or interest in possession trust. However, the value of the trust will be deemed as an asset of the second partners estate, and, as such, liable to IHT.If the interest in possession trust were to invest in a BPR product, then after two years, assuming the second partner survives his or her spouse by this period, and the arrangement is held until the time of his or her death, then the trust assets, to the extent that they are invested in BPR solutions, will be exempt from IHT. This strategy would also enable the full amount of the

Miss B is 62 and owns a successful trading business. Unfortunately, having worked hard to build up her business, is diagnosed with a debilitating illness and would like to sell and retire so that she can enjoy the rest of her life. The nature of the business means that it already qualifies for BPR. However once the shares are sold, the proceeds will potentially be liable for IHT, if, as seems likely, Miss Bs death occurs in the short term. She is concerned about the effect the IHT charge will have on the bequest she would like to leave her nieces and nephews. However, if Miss B sells her shares and invests the proceeds into a BPR qualifying arrangement, the funds will continue to receive BPR relief without interruption, provided the investment is made within three years of the sale of her business. In this way, even if her death occurs shortly thereafter, the purchase of the BPR shares, this part of her wealth will remain exempt from IHT. If her death does not happen in the short term, she still retains full access and control over her investment should she need it in the future.

second partners own nil rate band to be applied against his or her own estate when they die, thus protecting it for the full benefit of his or her own children.


BPR and Tax Planning

within three years prior eligibility for BPR, it is possible to make a BPR investment and immediately transfer the funds into the discretionary trust; again avoiding any chargeable lifetime transfer. It is important to note, however, given the current political climate in respect of tax avoidance, that this latter solution should not be pre-ordained. Finally, a Word of WarningGiven the attractions of BPR investment solutions, it is no surprise that they are a topic on HMRCs radar. The Finance Act 2013 introduced anti-avoidance provisions specifically to deal with one type of planning using BPR which it considered at least against the spirit of what parliament intended. The measure introduced by the Finance Act concerns the basic rule that IHT is charged on the net value of an estate after deduction of liabilities. If, prior to the 6 April 2013, an individual died with an outstanding debt that was used to purchase a BPR investment, their estate affectively got double benefit for IHT purposes.

Under the new provisions, where a liability is attributed to financing the acquisition of property which qualifies for BPR, the liability will reduce the value of the investors estate only if it is paid out of the estate in money or monies worth. This is to ensure that loans financing the purchase of exempt or relievable property are deducted

Mr C borrows 400,000 and purchases an investment qualifying for BPR. He dies four years later and his BPR investment is now valued at 500,000. Is subject to BPR at 100% and therefore exempt from IHT. He also has property worth 500,000 and investments of 450,000. Prior to the changes the loan could have been offset against his property or investments. However, since the change the loan will now be offset against the relievable assets i.e. the BPR Investment such that the house and investments remain within the taxable estate.

Given the attractions of BPR investment solutions, it is not surprise that they are a subject on HMRCs radar

from the value of the assets qualifying for relief, such that there is no double tax benefit.

BPR solutions are now firmly established, reasonably well understood and offer a plethora of potential solutions in the estate planning market. One misconception remains however, that they also represent an alternative strategy to the more common IHT mitigation tools. The reality is that BPR should be seen as a

complimentary solution, that can be combined with many other techniques; almost always with interesting and enhancing results. EIS

Business OwnersFor many business owners their business offers the perfect shelter from IHT. However, when the business is ultimately sold the protection from IHT will be lost. This need not, however, be the case.BPR - A Gateway to Discretionary TrustsIn 2006 the government made some fundamental changes to the taxation of trusts. This effectively left discretionary trusts as the last remaining type of flexible IHT efficient trust. However, gifts to discretionary trusts in excess of the nil rate band are subject to a 20% up-front chargeable lifetime transfer tax. In practice, due to the grossing up rules, this charge is actually 25% on the settlor in most occasions. This can be avoided if the investment to be placed into trust is held in a BPR qualifying asset for two years prior to being moved into the trust, as this eliminates any chargeable lifetime transfer. Furthermore, where monies going into the discretionary trust are

Manchester. Bruntwood TowerTuesday 28th April 201510.30am - 1.30pm

London. The Capital ClubThursday 30th April 201510.30am - 1.30pm

Both of these seminars will explore the possibilities for HNW investors of all types, and will explore EIS/SEIS, VCT, BPR and SITR investments with an impressive panel of expert speakers. Lunch Included.

Registration is free - Full details at http://tinyurl.com/k3gtmsx

Tax Efficient Investing for HNW ClientsAn Adviser Seminar on EIS/VCT and BPR Investments from IFA Magazine and EIS MagazineCPD accredited

Staying one jump ahead is important for any investor, but INS Rosehill Enterprises PLC is literally giving people a chance to take a leap forward with their portfolios. Established in 2013, Rosehill is an unquoted public company and plans to generate attractive investment returns by backing successful show jumping horses. The company focuses on the identification of horses, then their purchase, development and eventual sale. The management team behind the company has a proven track record in this area and have already shown the profitable nature of the concept. Rosehill is planning to raise around 4m which will fund the training and development of horses which can cost from 350,000 to 1 million per horse. It is anticipated that anywhere between three and eight horses will be owned at any one stage. All horses which are owned by the company are insured for loss of use, mortality and theft.As for returns, Rosehill is targeting a minimum of 167p for every 100p invested over a four year period. This excludes any tax breaks that may have been received. The company has received advance assurances from HMRC that the Companys trade will qualify under the Enterprise Investment Scheme. International CredentialsRosehill is run by founder and managing director Caroline Wilks and has two top international show jumping horse talent spotters in the shape of Duncan Inglis and Henk Nooren. The pair, who have an international reputation, have over 15 years experience in training the worlds leading horses within the sport. The company believes that there are a limited number of experts who can operate at this level of the sport, who have the necessary combination of skills, expertise and network of contacts to identify the horses. The companys management already has an impressive track record, bringing on and selling horses at a high rate of return. Wilks says that: Over the past five years, show jumping has become a major league sport which attracts and generates huge amounts of money. The demand for horsepower at the very top of the sport is driving up the prices of horses that have the potential to be world champions. Show jumping horses ready to compete at World Championships, or the Olympics, have commanded prices of between 1m and 5m.

Also, the industry continues to experience significant growth, with increasing interest, involvement and inflow of money from new entrants around the globe, including the Middle East, South America, Eastern Europe and the Far East.

Wilks points to the fact that there are significantly more buyers now than there were 15 years ago and whats more, they have more to spend than ever before. Parties are willing to spend over 1m on show jumping horses.Helping the elite nature of the sport are quality sponsors such as Longines Global Champions Tour, the Gucci Masters in Paris and the Rolex Grand Slam Series, attracting wealthy clients and nations. Last word goes to Wilks: I am committed to maintaining an investor relations programme, forwarding regular updates with video links, photographs and trading updates in addition to the Annual Report and Accounts. The Company intends to provide Investors with the opportunity to exit from June 2018. I strongly believe the Company is an attractive, asset backed, alternative investment. EIS

Clear RoundINS Rosehill Enterprises PLC

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23www.eis.magazine.com March 2015


Life After RenewablesEIS Magazine talks to Claire Ainsworth, Managing Partner of specialist investment manager Triple Point

As most of us are aware, 5th April marks the final closure of the opportunity to invest in renewable energy companies through EIS, SEIS or VCT funds. And theres nothing quite so calculated to concentrate the mind as a door thats about to shut for ever.It all leaves Triple Point, a manager with particular strengths in renewable energy and social causes, in something of a fix as far as its EIS and VCT schemes are concerned. In particular, the 5th April deadline marks the end of the road for Triple Points Hydro VCT, one of the last opportunities to invest into Feed-in Tariff based renewable energy assets through a VCT. The fund, it says, aims to deliver a tax-free IRR of 10% over a 16 year timespan, taking advantage of what it calls long term, predictable, and RPI linked revenue streams which can be distributed as tax free dividends.Triple Point was originally founded in 2004, it says, to bring together complementary skills and experience in three core disciplines: structured finance, tax and investment. It stresses that it doesnt give VCT and EIS advice rather, it relies almost completely on advisers for its distribution channels. And during those ten years, it claims, it has sourced, arranged and managed more than 250m of VCT and EIS investments.

HNW ClienteleYes indeed, but how is all that going to change now that the doors to eco power investment are closing? We spoke to Managing Partner Claire Ainsworth, who is also Chief Investment Officer and Chairman of the Investment Committee at Triple Point. The key attraction of these renewables funds, Ainsworth says, is not so much that they reflect a deeply principled stand (although they do that as well), but that they aim to target capital preservation the overarching priority for the group, she says - and they are not particularly correlated to market performance. Thats something that a largely HNW clientele particularly prizes, she says. But yes, its undeniable that the biggest public focus of the

last years activity has been in funding a pipeline of hydro VCT projects, TP Income and TP 11 - of which two were due to close this year. So whats the impact likely to be?Up to a point, of course, the existing VCTs and the present EIS funds will carry on regardless as a management activity. But that doesnt quite address the challenge of the moment.

A Service, Not a FundSo whats going to take over the focus of new issue attention if we dont have renewables? Well, she says, a lot of it is likely to move toward the Triple Point EIS, a discretionary management service which she says is heavily committed to small scale infrastructure investments which qualify for the EIS tax benefits. Its important to recognise that this is a tailored portfolio service rather than a unitary sort of fund a direction which Ainsworth says is best able to adapt to the differing needs of a varied clientele with different priorities and time horizons. As a general principle, Ainsworth says, the Triple Point EIS aims to invest its fundholders money within six months of them joining the Triple Point EIS Service

It would be fair to say that this years disqualification from alternative energy investments is likely to force a significant change of direction for the group. Fortunately, she says, Triple Point maintains a varied pipeline of other interests, including businesses related to infrastructure and social development. And that, whatever else happens, there is still a firm emphasis on businesses with a secure customer base or with high barriers to entry.Socially Oriented ProjectsThe construction side of the EIS Service is heavily committed, among other things, to firms which build apartments in and around UK town and city centres for the use of young adults, including many with disabilities or other needs. The projects themselves, it says, have the advantage of possessing a relatively short construction phase meaning that they are easy to forecast. And that in turn, Ainsworth says, ought to mean that the businesses invested in will be able to advance-manage their project pipelines to ensure that there is always sufficient liquidity to meet shareholders exit expectations.Any Further Chances for Energy?Industry experts currently reckon that combined heat and power systems, a Triple Point favourite, may still turn out to

Capital preservation is the overarching priority for the group & renewables are not particularly correlated to market performance


be achievable in some shape or form within the allowable EIS orbit the details may turn out to depend on how the SITR rules take shape. Ainsworth was clear when we spoke to her in February that the company is still interested in biomass as an investment direction. But anaerobic digesters, an area where Triple Point has been particularly active, have definitely fallen under the legislative axe along with renewable energy and will no longer be achievable in a few weeks time. And that really annoys the Renewable Energy Association (REA), which has let it be known that it represents the loss of a potentially vital revenue stream for small-scale projects of all kinds. Around 25 anaerobic digester projects are now likely to be shelved, it says - equating to a not-inconsiderable 20MW of potential generation, and the loss of up to 130m of investment thats already raised for the sector.A view that seems to chime in with Ainsworths own comments about the renewables sector in general. From solar to wind power, and especially among smaller projects, theres been a funding gap, she says, and that was why Triple Point felt that this was the way to go. And where the banks dont want to go, thats where the opportunities were there to be taken. Perhaps the technologies were too new, or perhaps they sounded too complicated for the big lenders. All of which was a further stimulus.Business Property ReliefAll in all, there was no sense coming from Ms Ainsworth that Triple Point was running out of ideas for new projects just because the dozen or so renewable energy VCTs has been locked down into a permanent maintenance pattern. We can certainly expect to see more activity from the groups existing Business Property Relief arm, known as Navigator, which it describes as a non-UCIS discretionary management service arranging investment into BPR.)

And Finally. SITR

But a final note seems in order. As weve said, our call to Triple Point took place in February, before this months spring Budget statement which also clarified the position with regard to Social Investment Tax Relief, one of the few remaining ways of getting into alternative energy. With the benefit of post-Budget hindsight, we now know that there was never any real intention to let conventional tax-effective funds continue into renewable energy rather, SITR is to be focused on community energy projects, which are going to be smaller-scale. It was all too soon for speculation. We, together with a lot of the industry, are looking closely at the investment rules as they develop, was all we could squeeze out of Ms Ainsworth. And were guessing that ingenuity will continue to be the order of the day.


Open Offers SEISEIS VCT OEIC IHT BPRInvestment Key:

Motion Picture Capital provides a platform for the development, financing and distribution of film & television content as part of the Reliance Entertainment Group. Other Reliance companies include Steven Spielbergs DreamWorks Studios. This HMRC-approved EIS Fund offers investors access to a robust capital preservation strategy with a unique charging and profit distribution structure. A direct equity participation in this slate of high quality film & television projects of a truly global scale adds significant upside potential. As with all investments, there is the potential for risk as well as reward: investors may not get back what they put in. EIS tax relief depends on individuals circumstances and may be subject to change.* (Inc. initial charge)

T. 0207 025 8199E. [email protected]

Motion Picture Capital - HMRC-approved EIS Fund

Minimum investment: 25,000*

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EIS

Kuber Ventures Multi-Manager EIS Platform, has a range of portfolios which are each diversified across a number of Fund Managers. Through a single application and depending on the Portfolio selected, our Portfolios allow investors to create a diversified spread of up to 40 qualifying EIS investments.

Investors may select individual funds or choose to achieve further diversification by investing in one of the Kuber Portfolios available.

Our Portfolio choices include: Renewable Energy Portfolio (Fund of 3 Funds) Deadline 31st March for current tax year Exit Focused Portfolio (Fund of 4 Funds) Deadline 31st March for current tax year

Diversified Portfolio (Fund of 9 Funds) Evergreen with a regular share allotments

Venture Growth (Fund of 5 Funds) Evergreen with regular share allotments

SEIS Portfolio (Fund of 2 Funds) Deadline 31st March for current tax year

T. +44 020 7478 0901E. [email protected]

www.wine-eis.com

Kuber Ventures Multi Manager Platform

Amount to be Raised: 4m

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EIS

An asset-backed investment combining the asset class of fine wine and its distinctive investment characteristics with the tax advantages of EIS. The Company has been successfully trading fine wines since 2012, and, since already trading as an EIS, can issue EIS3s promptly.The investment team, with 60+ years combined wine investment track-record, has a proven, disciplined trading methodology, is fully independent and contains a unique blend of wine market knowledge, financial market background and analytical ability. Wine stocks are bought and sold through counterparties worldwide, are stored in UK government bonded warehousing and are insured at replacement value. The market is currently well below trend and its long run tendency to outperform more traditional asset classes remains unchanged. Fine wine as an asset class has outperformed equities, gold and oil over the last 21 years, with lower volatility, therefore also offers risk reducing portfolio diversification.*Closing rounds 31 March, 30 June, 30 September, 31 December 2015. Minimum investment 10,000 and 3% available to intermediaries.


www.kuberventures.co.uk

The Wine Enterprise Investment Scheme Limited

Minimum Subscription: 20,000

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Open Offers

Octopus Eureka EIS is a discretionary managed portfolio that aims to provide investors with a broad range of tax benefits by investing in EIS-qualifying early stage UK companies. The diverse portfolio of companies, across a range of industries and sectors, offers the potential for higher investment returns over the long-term (more than five years) when compared with portfolios of FTSE 100 companies.

A unique investment approach: Octopus Eureka EIS clients typically hold a portfolio of at least 15 EIS-qualifying companies. These may be either unquoted companies or companies that are already listed on the Alternative Investment Market (AIM), part of the London Stock Exchange.Investments in unquoted companies are managed by the Ventures team at Octopus, which specialises in investing in fast-growing unlisted companies. The Ventures team includes investment professionals from a wide variety of backgrounds, including former entrepreneurs, professionals, academics and industry experts.Investments in companies listed on AIM are managed by the Octopus Smaller Companies team. They look after AIM mandates worth more than 620 million, across a range of Octopus products. T. 0800 316 2067E.salessupport@octopusinvestments.comwww.octopusinvestments.com/eis

Octopus Eureka Enterprise Investment Scheme Portfolio Service

Amount to be Raised: Unlimited

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Peto reports 12% savingsat Barts HealthPeto was appointed in September 2014 to support the Trust in the delivery of savings from the off-contract spend of around 38million per year. Five months into service delivery the Peto team, are achieving 12% realised savings against a target of 4% on prior spend. This is a strong result, reinforced by huge opportunity to increase the scope of the throughput which has been lower than forecast to date. Peto has been working with Barts Health procurement team, budget holders, and the Peto marketplace, peto.co.uk.About Peto Active in over 200 NHS trusts, Peto connects public sector buyers and private sector sellers via an easy-to-use online marketplace, and where necessary, with additional resources to reduce spend via its insourcing procurement service. T. 01983 282925E. [email protected]

www.peto.co.uk

Peto - One To Watch

Amount to be Raised: TBC

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EIS

The Triple Point EIS Service targets investments across a range of sectors including amongst other things infrastructure, construction and renewable energy.The investment strategy has been shaped by our extensive and successful experience managing EIS qualifying investments, where we adopt a cautious and meticulous approach to managing investors capital without losing the ability to capture growth opportunities. This enables the Service to target returns in excess of 10% per annum, taking into account the initial income tax relief received by investors, and to target transparent exit strategies which are designed to facilitate an exit for investors after three years.


www.triplepoint.co.uk

Triple Point EIS Service


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Open Offers

The Fund will invest in a diverse portfolio of up to 5 businesses in the Leisure & Hospitality sector in Central London, with the award-winning Imbiba Team as asset managers. Imbibas outstanding track record boasts 8 EIS exits realised with an IRR of 35% (excluding EIS tax relief). Significant personal investment by both Imbiba and Enterprise (EIP) of up to 200,000 into each investee company. The offer comprises 2 investment tranches of 10m in current tax year 2014/15 and 15m in 2015/16 with an industry leading performance hurdle rate at 1.50 per 1.00 invested.

T. 020 7487 8282 www.enterprise-ip.com

Enterprise Invesment Partners - The Imbiba Fund


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HMRC-approved EIS Company backing UK talent.Omeira Studio Partners is a UK based multi-platform content production company created to co-finance commercial projects with the major film studios, mitigating production risk with a confirmed route to market.

All our productions must be co-financed by a major or large independent studio and have distribution in place prior to investment. Prior to greenlighting productions, Omeira covers 70% of production costs with a combination of distribution and other trade deals. Our film team, whose credits include Oscar winners and who have distributed over 1000 films, have identified a slate of distributor-backed projects that fulfil the companys criteria. There are no management fees and the Directors are aligned with investors to share in profits.

T. +44 20 7193 0205E. [email protected] www.omeira.com

Omeira Studio Partners Ltd.OpenNow

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Sustainable Technology Investors Approved EIS Fund 3 (STIL EIS Fund 3) is offering exposure to a portfolio of sustainable energy companies within the Anaerobic Digestion (AD) and Hydro sub-sectors, targeting superior risk adjusted returns with an emphasis on downside mitigation, whilst taking advantage of EIS tax incentives. STIL EIS Fund 3 is targeting cash returns to investors of 1.25 for a net 70p invested (79% uplift), representing a 16% IRR, equivalent to a 30% IRR to an additional rate tax payer entitled to EIS income tax relief. All subscriptions received by 2 April 2015 will be invested in the current tax year, allowing EIS Income Tax Relief to be claimed in the 2014/15 tax year or carried back to the 2013/14 tax year. This is STILs third EIS Fund with a similar focus, from a sector specialist management team with strong investment and development track record, particularly in AD and Hydro. STIL has a highly experienced Investment Team with a verified track record of 45% IRR from 55 sustainable energy and technology investments over 29 years and an existing platform of two EIS qualifying businesses available for co-investment and a strong pipeline of development assets.This financial promotion has been approved by Sustainable Technology Investors Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) with firm reference number 221604. This promotion is directed only at advisers who are authorised and regulated by the FCA. Investments in funds such as STIL EIS Fund 3 are high risk, and investors may not get back all the money they put in.


www.lgbrcapital.com

Sustainable Technology Investors Approved EIS Fund 3


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EIS


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Calculus Capital is a specialist in creating and managing private equity funds for individuals. A pioneer in the Enterprise Investment Scheme (EIS) space, Calculus launched the UKs first approved EIS fund in 1999 and has gone on to launch 14 further funds. Calculus seeks capital appreciation from dynamic, established private UK companies across a multitude of sectors.Calculus Capitals experienced investment team, diligent investment process and hands on approach has resulted in an impressive track record of investment success, achieving 20 exits to date with an average ROI of 3.4x exclusive of tax reliefs.Calculus Capital is authorised and regulated by the Financial Conduct Authority.


Calculus Capital EIS Fund 2015


Open04/06/2014

Close03/04/2015

EIS

The Chillingham Classics EIS specialises in the acquisition, restoration and sale of fine historic automobiles.

Management team has sold over 250m of classic cars Target return: 1.40 for every 1 invested in 3 years Lower risk profile due to significant asset backing

Classic cars benefit from a set of distinctive drivers: Limited or no new supply, a growing number of market participants and an increasing interest for lifestyle and investment purposes. Collectively, these factors combine to make the market for classic cars more robust, more accessible, and more attractive as an alternative asset investment class. Minimum investment 10,000 and 3% available to intermediaries. T. 020 3752 7211E. [email protected]

Chillingham Classics Classic Car EIS


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EIS

The Seneca EIS Portfolio Service is an evergreen discretionary management service that offers investors the opportunity to build a portfolio of equity investments in UK based SMEs, which are seeking an injection of capital to fund their next phase of growth.The EIS Service gives investors a portfolio of 4-6 investments per year diversified by sector. It targets investment returns of 1.60 to 1.80 per 1 invested (excluding tax reliefs). Established in the Autumn of 2012, the EIS Service has completed 19 investments totalling 15m as well as several single company EIS funding rounds.Seneca Partners (Seneca) will act as portfolio manager to the EIS Service. Seneca is an investment manager and advisory business formed in 2010 and specialising in sourcing and providing funding to small and medium sized businesses. It is part of the wider Seneca stable of companies, which had over 500m invested assets and over 4bn debt under advice. The knowledge, experience and pedigree of Senecas investment team, combined with their individual track records of successful investing in the SME sector, is complimented by an extensive deal flow network in the UKs SME heartlands of northern England and the west midlands.


www.lgbrcapital.com

Seneca EIS Portfolio Service


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X-Wind has developed a ground-breaking Vertical Axis Wind Turbine aimed at the medium scale renewable energy sector. The team has drawn on its extensive experience gained developing the worlds largest wind turbines at Vestas. Since its launch in 2012 X-Winds core patented technology has won five high-profile technology awards.X-Wind visible sales pipeline exceeds 40 million. The company is also securing commercial commitments for its 80kW turbines from customers in need to secure energy pricing and supply. X-Wind has secured a partnership with the UKs largest electricity user. To date X-Wind has raised 1.7 million in grants and 0.3M of equity. X-Wind currently requires 2.0M of equity funding to complete the production of their first full-scale 80kW turbine.

T. 01983 282925E. [email protected]

X-Wind Power

Amount to be Raised: 2,000,000

Open01/01/2015

CloseTBC

EIS

Open Offers

The Select Television Production EIS 2 (Fund) is an alternative investment fund providing access to new UK television production companies (Investee Companies) that have the potential to deliver capital growth and which qualify for tax relief under the EIS. The Investee Companies will create new dramatic content for the UK and international markets, and will benefit from the significant experience of the Investment Adviser, Great Point Media - a team that possesses over 60 years combined experience in entertainment media, including the running of production and content distribution businesses as well as major television networks. The team also brings with them a wealth of investment management experience, having managed in excess of 300m of EIS qualifying media investment with a proven cradle to grave track record of delivering timely EIS3 certificates and value returned to investors. The Fund has an illustrative return of 1.08 (exclusive of tax relief) and will be allotting shares pre 5 April 2015 to ensure the availability of carry back to the 13/14 tax year. * (20 March for applications accompanied by cheque)T. 0207 550 5512E. [email protected] www.greatpointmedia.com

Select Television Production EIS 2Open15/09/2014

Close27/03/2015*

EIS

Minimum investment: 10,000

The Blackfinch Media EIS Portfolios allows investors to access the attractive tax benefits of EIS by investing into qualifying media companies. Our portfolio companies target capital preservation through their predictable income streams underpinned by intellectual property or high levels of contracted revenue.The Music Publishing companies will create original music scores for films and television programmes which benefit from predictable long-term royalty streams.

The Television Distribution companies will fund the production of television programmes where the majority of revenues are known and contracted in advance. Target returns of 1.20 for each pound invested (Ignoring tax reliefs). Investments based on fixed rate and pre-contracted revenue streams in a well established industry. Predictable returns enable portfolio companies to capture, sell or refinance their revenues providing an expected exit strategy for investors. Investor can benefit from the 30% income tax relief, CGT deferral & tax-free gains.

T. 01684 571255E. [email protected]

www.blackfinch.com

Blackfinch EIS Portfolios


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The Deepbridge Technology Growth EIS represents an opportunity for investors to participate in a portfolio of actively-managed growth-stage technology companies, taking advantage of the potential tax benefits available under the Enterprise Investment Scheme. The Deepbridge Technology Growth EIS is a diversified portfolio of actively managed high-growth companies seeking commercialisation funding. The Deepbridge EIS invests in companies that have a proven technology, clear intellectual property and are operating in a high growth/high value market sector. The Fund is focused on investing in high growth companies that are seeking to commercialise and expand, specifically in three sectors: Energy & resource innovation; including waste water treatment and conservation, advanced materials and renewable energy generation technologies; Medical technology; such as medical and surgical instrumentation, devices and diagnostics; IT-based technology; particularly Enterprise Application Software and Software as a Service.

The Deepbridge Hydro EIS is a discretionary managed portfolio service; representing the last opportunity for UK taxpayers to invest in EIS-qualifying investee companies generating long term, stable and predictable returns from the operation of hydro-electricity generating projects in the UK. The core proposition of the investee companies identifies, through rigorous due diligence and engagement, attractive projects in the hydroelectricity sector of the UK renewable energy industry. The proposition involves the acquisition of established projects as well as construction and development projects; in which case proven engineering, procurement and construction contractors will be appointed with oversight by the Investment Manager. By investing in such asset-backed opportunities that benefit from contractual revenues available under the Renewables Obligation, the EIS seeks to ensure an enduring focus upon capital preservation as well as generating stable and predictable returns for the investor. The target return for the Deepbridge Hydro EIS is 125p returned for every 100p invested, over 3-4 years. To ensure maximum tax efficiency for the investor, the Deepbridge Hydro EIS is entirely investor-fee free at point of investment. The value of an investment may go down as well as up and investors may not get back the full amount invested. Investments in small unquoted companies carry an above-average level of risk.

T. 01244 893182www.deepbridgecapital.com

T. 01244 893182www.deepbridgecapital.com

Deepbridge - Technology Growth EIS

Deepbridge - Hydro EIS



Open01/08/2013

Open01/11/2014

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Close26/03/2015

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EIS

The target return for the Deepbridge Technology Growth EIS 22.9% p.a. over a minimum of three years; representing mid-case capital growth of 160p returned for every 100p invested. To ensure maximum tax efficiency for the investor, the Deepbridge EIS is entirely investor-fee free at point of investment.

Open Offers

Rockpools EIS Portfolio Service offers an alternative to traditional EIS funds. Rockpool creates direct private company investment opportunities for its Network of members which includes hundreds of successful entrepreneurs and professionals from a wide range of business sectors. Deals created for the Network are also open to a wider audience of investors through Rockpools EIS Portfolio Service. Rockpool targets companies which are profitable or have significant asset backing. Asset backed sectors include crematorium operation, electricity generation, construction project delivery, managed storage services and childrens nurseries.Rockpools model offers full transparency and control with meet the management sessions, regular updates, investment reviews and an on-line portal. There are two ways to access the service:

EIS Magazine Issue 2

Documents

Transcript of EIS Magazine Issue 2