The MoneyLab Blog

Can a foreign (non-UK) company obtain SEIS and EIS monies?

Posted by Johnathan Graham on 07-Jun-2018 16:07:53

 

If you are a foreign company looking to expand into the UK, the good news is that you can avail of the SEIS and EIS schemes, thereby benefiting not only from increasing market reach, but also by being able to tap into UK private investment (via the SEIS and EIS schemes). All monies raised are received directly into the foreign company's bank account, allowing the foreign company to directly use the capital.

The SEIS and EIS incentives allow qualifying companies to raise capital, which is critical to expanding into new territories. The SEIS/EIS schemes enable investors to claim back income tax reliefs (50% for SEIS and 30% for EIS), avail of Capital Gains Tax reliefs and/or deferrals and apply for loss relief if it all goes wrong.

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SEIS/EIS Loss relief: Do I lose all my investment if the company fails?

Posted by Johnathan Graham on 24-May-2018 10:36:10

 

Everyone works hard for their money, and as a result investing is a daunting experience due to the risk of loss.  Fortunately, an investment in Enterprise Investment Scheme “EIS” and Seed Enterprise Investment Scheme “SEIS” companies offer loss relief.  This incentive enables an investor to offset losses obtained against either their Income Tax or Capital Gains Tax “CGT” amount.

SEIS/EIS  were set up by the government to enable small startup companies to attract their first round (and riskiest) of capital.  With EIS, a company can raise up to £12 million and with SEIS the company can raise £150,000.

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Five points every startup should be aware of to be GDPR compliant

Posted by Johnathan Graham on 18-May-2018 12:37:05

 

The dark cloud of the General Data Protection Regulation, better known as GDPR is about to descend upon us. Have you got your umbrella of security and raincoat of compliance at the ready? Are you prepared for the hailstones of data protection? Hiding away by taking shelter unfortunately is not an option; but never fear, Johnathan is here with a summary checklist of what needs to be done by the 25th of May.

GDPR is coming into effect, replacing the Data Protection Act 1998.

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Irish cross border trade considerations for Brexit & beyond

Posted by Vasiliki Carson, Sapphire Capital on 15-May-2018 15:03:43


The stickiest point in the Brexit considerations is, arguably, the question of the Irish border, being the UK’s only land border. As a result, there is uncertainty and ensuing anxiety for entrepreneurs and early-stage companies both North and South of the border, that are trying to figure out how to best prepare themselves.

Here is how I see what Irish entrepreneurs need to think about in order to  prepare for Brexit and the ensuing implications for cross border trade between the South and the North of Ireland:

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Topics: EIS Schemes

Four key changes to SEIS & EIS you now need to be aware of

Posted by Vasiliki Carson, Sapphire Capital on 26-Mar-2018 16:03:51


 

The EIS changes initially announced in the 2017 Autumn Statement have now passed into law with the granting of Royal Assent on the 15th of March 2018. Here are the four main changes that you need to be aware of currently:

1) Advance assurance applications must include the names and addresses of potential investors. This change was made to reduce the number of applications that HMRC receives, to reduce the volume of requests to better concentrate efforts on propositions that have a higher likelihood of raising capital. HMRC guidelines require for applicants to provide the names and addresses of six interested investors (of course if you are raising a small amount, six names may not be necessary). For more information on this change, please see our prior blog called "The chicken or the egg? New HMRC requirements to stop speculative SEIS/EIS advance assurance applications".

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Topics: EIS Schemes

Five things you need to prepare for raising money

Posted by Boyd Carson, Sapphire Capital on 09-Mar-2018 10:23:10

 

In my experience, raising money for a business is difficult, time-consuming and stressful. As an entrepreneur, you will be torn between keeping your business going and spending considerable amounts of time trying to raise finance. The reality is that raising finance always takes longer than you think (and have budgeted for). Before you approach any potential investors (and that also includes friends and family), you need to make sure you are sufficiently prepared both regarding presentational materials as well as how you have prepared yourself (i.e., you need to be crystal clear on the business idea and know the key numbers etc.).

To help you on your way, here is a list of the five key areas we recommend you have prepared beforehand:

1) Write a well thought out business plan.

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Topics: EIS, SEIS, Business Plans

The chicken or the egg? New HMRC requirements to stop speculative SEIS/EIS advance assurance applications

Posted by Boyd Carson, Sapphire Capital on 27-Feb-2018 12:51:15

 
You know the saying about "which came first: the chicken or the egg?" Well, which came first: the investor or the tax relief?  From January 2018, HMRC have stated that investors should be identified before they will consider the potential tax reliefs. Having worked with numerous companies over the years to obtain the SEIS/EIS tax reliefs, I am not so sure. It is often the fact that the company has obtained the SEIS/EIS advance assurance (i.e., the potential tax reliefs) that will attract the investors to invest in the first place. But it is what it is and we have to work with HMRC to ensure we comply with the new regulations. 

1) The Issue:

From the 2nd January 2018, HMRC is not accepting SEIS and/or EIS advance assurance applications which they consider to be "speculative" i.e., the company which is applying for SEIS/EIS advance assurance does not yet have any individuals (or investment fund) who want to invest in the company.

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Topics: EIS

On winning best SEIS Fund Manager 2017

Posted by Boyd Carson, Sapphire Capital on 20-Feb-2018 09:32:20


Normally we do not like to show off, but this is definitely an exception. We are delighted to have won the best SEIS Fund Manager for 2017, awarded by the Enterprise Investment Scheme Association ("EISA"), which was presented at the House of Lords last Tuesday night. A special thank you to the sponsors Reyker, all the judges and of course, the EISA. The judges commented that “Sapphire [was] very supportive of the space. Interesting mix of funds and at early stage. Strong comms and support of investors and portfolios.” 

Check out our various SEIS funds for yourself - here.

Oh, and I might as well say it. I was "Highly Commended" in the "Innovation, Newcomer or Rising Star in EIS and SEIS" category. Many thanks to the sponsor Deal Partners, the EISA and all the judges. The winner of this category was James Ramsey of Tax Efficient Procurement Services (TEPS) - who thoroughly deserved to win as James and TEPS are real innovators in the SEIS/EIS sector. We fully support James and TEPS.

Enough said. Back to work.

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Topics: EIS Funds, SEIS funds, EISA

MiFID II rules for investment advisory fees

Posted by Vasiliki Carson, Sapphire Capital on 10-Jan-2018 09:51:53

 

As MiFID II is now in force and compliance with the new regulations is on everyone's minds, entrepreneurs and investors should ensure they understand the rules for Independent Financial Advisor (IFA) charges, particularly with relation to raising capital.

MiFID II aims to ensure that "investment firms act in the best interest of their clients"* by requiring companies to improve governance and business conduct, as well as introducing new supervisory powers at both national and European level. The implementation of the legislation sets out more specific requirements to achieve this goal.

While the rules have changed from MiFID I, few of these changes are new to the UK market, as a lot of the rules were already adopted from the implementation of the FCA's Retail Distribution Review (RDR) in 2012. The RDR effectively brought tighter controls to IFA charges and technical knowledge requirements for independent financial advisors in the UK.

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Topics: Entrepreneurship, Investor Documents, private equity, Information Memorandum

"Ready, Steady, Grow" Belfast rescheduled

Posted by Vasiliki Carson, Sapphire Capital on 08-Dec-2017 07:00:00


Hurricane Ophelia (aka just another windy day in Belfast) made us cancel our October date for hosting, alongside GBI Magazine, the EIS Association's  "Ready, Steady, Grow" Belfast event (#Readysteadygrow).

I am however pleased to announce that the event is now rescheduled to be held on Tuesday the 16th of January at 1.30pm at the Metropolitan Arts Centre.  

Here are three reasons why you should consider attending Ready, Steady, Grow:

 

 

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Topics: EISA

Autumn Statement 2017 - SEIS and EIS implications

Posted by Vasiliki Carson, Sapphire Capital on 22-Nov-2017 22:00:55


Today's Autumn Statement 2017 gave positive news for the patient capital sector and a vote of confidence to the Enterprise Investment Schemes. Following Twitter this afternoon, one could almost hear a collective sigh of relief coming from financial advisors, investors and entrepreneurs alike, as the action points from the Patient Capital review were revealed. The main changes announced for the Enterprise investment schemes are as follows:

 1) The support to "knowledge intensive" companies significantly expanded, doubling the limits for investment in such companies. The annual investment limit will increase to £2 million, and a qualifying firm will now be able to raise up to £10 million through EIS. Also, there will be greater flexibility as to the age limit of a company, so that older enterprises could still avail of the schemes.
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Topics: 2017 Autumn Statement

Getting your business ready for the crowdfunding and angel platform stage.

Posted by Michael McDowell, Sapphire Capital on 16-Nov-2017 15:13:15

 

For some time the team at Sapphire have championed the use of crowdfunding and angel investment platforms. They continue to provide businesses with a stage to present their investment opportunity and the administrative systems to accept investment in an orderly manner. This has been achieved by the use of new technology and design of efficient business processes.

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Topics: Crowdfunding

Upcoming changes to the Enterprise Investment Scheme rules

Posted by Vasiliki Carson, Sapphire Capital on 24-Oct-2017 09:28:48

 

Over the past few months, the Enterprise Investment Schemes received a lot of attention as HM Treasury published their Patient Capital Review Consultation. It is fair to say that some negative feelings for the schemes surfaced as a result of the consultation's conclusions. The private sector has responded, and the result is that significant changes to the schemes are to be announced during the Chancellor's Autumn Statement scheduled for the 22nd of November, 2017.

 

What potential changes should we expect?

Mark Brownridge, the Director General of the EIS Association recently explained to EIS Association members that the upcoming changes are being made to sharpen the schemes' focus on "high risk, innovative and growing companies that can scale up". Making a case for increasing employment and tax revenue will no longer be enough for a company to avail of the schemes. Mark identified a pattern coming out of his discussions with government officials: "listen carefully ... and the keywords you will hear are growth, innovation, and technology. This is [government's] new definition of well targeted. Whether you agree or not, this is HM Treasury's desired direction of travel."

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Topics: 2017 Autumn Statement

3 reasons why you should attend the "Ready, Steady, Grow" Belfast event

Posted by Vasiliki Carson, Sapphire Capital on 06-Oct-2017 07:31:24


Speaking on behalf of the team here at Sapphire, we are excited to be hosting, alongside GBI Magazine, the EIS Association's  "Ready, Steady, Grow" Belfast (#Readysteadygrow).

The event is to be held on the 17th of October at 1.30pm at the Metropolitan Arts Centre.  

Here are three reasons why you should consider attending:

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Topics: EISA

Issuing SEIS and EIS shares - 4 key considerations

Posted by Vasiliki Carson, Sapphire Capital on 31-Aug-2017 15:43:53


So, you successfully obtained SEIS and EIS advance assurance from HMRC and successfully raised your “risk finance” capital. Congratulations are in order, as achieving all of this is a lot of hard work! Before you pop open the champagne, however, you must ensure that you correctly issue the SEIS and EIS shares, as errors in share issuance can put all your hard work in jeopardy. (Grab a cup of coffee instead and read on, as there is still more work to do...)

Share issuances cannot easily be amended once filed and may result in your investors not being able to avail of the Enterprise Investment Schemes. If investors aren’t able to avail of the SEIS / EIS tax incentives, you may end up losing the finance promised to you.

Here are some guidelines to keep in mind when you are about to issue SEIS and EIS shares:

 

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Topics: SEIS

Are the EIS and SEIS set for a makeover?

Posted by Mark Brownridge, Director General of the EISA on 24-May-2017 13:16:27

 
 
Mark Brownridge, the Director General of the EIS Association, discusses the conservative party manifesto's intentions for the future of EIS and SEIS.  Sapphire Capital Partners highly recommend membership of the EISA; an overview of the benefits to becoming an EISA member can be downloaded by clicking here.
 
Are the Enterprise Investment Scheme and Seed Enterprise Investment Scheme set for a makeover? If the Conservative’s election manifesto is to be believed, they might be.

The document says the party is considering further incentives under the ‘world-leading’ (hear hear!) schemes, though, tantalisingly, does not hint much at their nature, beyond suggesting that they may be targeted at ‘innovators’ and start-ups in the digital sector (Conservative General Election Manifesto, page 78, The Best Place for Digital Business).

We have been campaigning for improvements to EIS and SEIS for some time and, broadly speaking (and in lieu of more details), we welcome any changes to the EIS and SEIS regimes that result in more smaller companies getting access to the funding they need to grow.

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Topics: EIS Schemes

How the tax man rewards you for being a crowdfunder

Posted by Michael McDowell, Sapphire Capital on 15-May-2017 11:37:35


When Airpos
board of directors decided to launch a round of fundraising they wanted to ensure it was open to as wide a community of investors as possible.  They wanted to avoid the traditional roadshow, photocopied brochures and hard sell over coffee.  They identified the efficiencies of equity crowdfunding platforms and particularly Crowdcube as the best way to raise money.  They also wanted to ensure investors receive all benefits possible from investing, including those offered from HMRC.  

AirPOS is the type of company the UK Government likes to encourage- it’s an innovative technology company that is growing quickly, employing staff that will contribute significant tax.  
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Topics: Crowdfunding

5 key considerations for awarding shares to employees in high growth companies

Posted by Jeremy Glover, Partner at Jurit LLP on 11-May-2017 16:59:47

 

Most successful high growth companies set aside between 10% to 20% of the share capital for key members of the team.  In fact many investors will only want to invest in a company if it offers effective equity ownership to employees.  To do this, you must ask a number of key questions before proceeding.

  • Who should participate?
  • How much should we offer?
  • What will the employees think?
  • How do we do this tax effectively?
  • How do we structure the awards?
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Topics: Entrepreneurship

Equity crowdfunding - the new reality

Posted by Michael McDowell, Sapphire Capital on 22-Mar-2017 15:02:58

 

As the leading crowdfunding platforms grow to a new level of maturity, businesses increasingly view this as a way of raising investment. They also appreciate the opportunity to use crowdfunding to raise the businesses’ profile, attract customers, professional partners and prepare for future fund raising rounds. The challenge is to get listed on a platform but there is some transparency in what they are looking for and what they expect from a business who wants to list. It’s also clear what a company has to do to get ready:

 

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Topics: Crowdfunding

ELITE – supporting high growth businesses across the UK

Posted by Mark Fahy, Head of UK Small & Mid Caps of the London Stock Exchange on 21-Mar-2017 08:30:12

Mark Fahy, Head of UK Small and Mid Cap Companies, London Stock Exchange

The London Stock Exchange Group understands the power of fast growing, ambitious businesses to the economic prosperity of the UK. These companies drive job creation, boost tax intake and create wealth across the country. What's more, the need for them to have access to appropriate growth funding is essential and we believe in the power of equity financing to support them.

In order for these businesses to expand and contribute to the economy, they need to rebalance their financing - away from debt, towards equity. But, the statistics remain troubling. According to data from the British Bankers’ Association, only three per cent of UK SMEs use equity finance, in stark contrast with the US, where over 70 percent of financing comes from various types of equity: angel investment, crowd-funding, venture capital, private equity or a stock market listing.

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Topics: London Stock Exchange ELITE program