The MoneyLab Blog

Five things you need to know about setting up UK branches

Posted by Johnathan Graham on 07-Oct-2019 14:43:28

 

When applying for SEIS and/or EIS advance assurance, a company is required to have a Customer Reference Number (CRN number) and Unique Tax Reference (UTR number). A UK company will have both numbers issued automatically upon incorporation. A company incorporated outside of the UK (foreign company or overseas company) must open a UK branch to obtain both numbers. A branch is a permanent establishment in the UK; it is an extension of the parent company and is required when the company has a presence in the UK.

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Topics: EIS, SEIS

Raising money through EIS as a Knowledge Intensive Company

Posted by Johnathan Graham on 01-Aug-2019 13:37:36

 

Enterprise Investment Schemes (EIS) allow high-risk start-up companies raise much-needed capital to in order to grow. EIS offers tax reliefs to investors which reduces their risk.

The scheme has various conditions a company must meet to qualify. The conditions include time frames from the first commercial sale, max employee numbers, qualifying trades and maximum raise amounts. For more information on EIS and the qualifying conditions, view our eBook.

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Topics: EIS, SEIS

5 requirements companies must meet for SEIS/EIS

Posted by Johnathan Graham on 28-Feb-2019 21:43:19


The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are very effective ways for start-up companies to attract private investment through the offering of tax incentives to investors.

There are conditions a company must meet to qualify for the schemes, some of which are well known to both entrepreneurs and investors. For example, the age requirement condition requires a SEIS company to be trading for less than two years; for EIS, the company cannot be trading for longer than seven years.

However, from my experience working with many companies seeking SEIS/EIS, there are some fundamental conditions that are equally important but not as well known.  Here are the ones that I see many entrepreneurs unaware of, which has led to problems with availing of the schemes:

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Topics: EIS, SEIS

Changes to the SEIS/EIS advance assurance process

Posted by Vasiliki Carson, Sapphire Capital on 14-Jan-2019 09:47:51

 

The advance assurance process for SEIS and EIS has changed! New online forms for SEIS, EIS and VCT are now available and are required to be used for any applications being submitted from the 1st of November 2018 onwards. Compliance statements SEIS1, EIS1 and SITR1, were also amended, although these forms were previously available online.

The new forms can easily be accessed on the gov.uk website, although you must be careful you select the correct one as there are a number of different versions that may confuse.

In addition to this new online form, HMRC now specifically requests applicants provide the below-listed documents:

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Topics: EIS, SEIS

Registering a UK branch with the Companies House - 10 key areas

Posted by Johnathan Graham on 08-Oct-2018 13:56:30

 

For a foreign company to qualify for SEIS and/or EIS they must meet at least one of two additional requirements. They must either: 1) Have a' permanent UK establishment which means an element of work is carried out in a fixed place of business. 2) Have a UK representative that can enter into contracts on behalf of the company (for more information read my prior blog: “Can a foreign (non-UK) company obtain SEIS and EIS monies”).

As stated on the Gov.uk website "you must register (with the Companies House) if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK". 

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Topics: EIS, SEIS, foreign company, OS IN01

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

How to identify pension and investment scams

Posted by Angela Brooks, Director of Pension Life on 23-Feb-2017 09:30:17


The world of pension and investment scams is dominated by some very slippery, dodgy, unregulated, unqualified, unscrupulous characters.  For example, in Spain, these "shady" characters are aptly labelled as “Chiringuitos” (bar flies) by the Spanish Regulator.  Herds of “introducers” masquerading as “wealth managers” stalk the unwary, flogging bogus occupational pension schemes and QROPS ("Qualifying Overseas Pensions Schemes") which they fill with toxic, high-risk, illiquid investments which pay the introducers handsome commissions – and ultimately ruin the victims.

So thank goodness for properly regulated and qualified UK-based accountants!  Except those in the “Peak Performance” network who were flogging things they called “tax-efficient investment schemes”.  Only they weren’t tax efficient.  And they weren’t investments.  As 46 investors have now discovered to their considerable cost, distress and humiliation.

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Topics: EIS, pensions

EU State Aid rules and the Enterprise Investment Scheme

Posted by Vasiliki Carson, Sapphire Capital on 01-Feb-2017 15:40:13


The word “Entrepreneur” originates from French, and was first used by the economist Jean-Baptiste Say in the early 19th century.  Its direct translation is “adventurer”, and that meaning conjures up attributes of bravery, resilience, and going beyond one’s comfort zone.

The current geo-political climate made me reluctant to write this blog as Brexit, with the potential triggering of Article 50, may indeed make this information null and void at some unknown point in time.  

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Topics: EIS

Does your company qualify for EIS? Complete our quiz to find out.

Posted by Boyd Carson, Sapphire Capital on 06-Jan-2017 10:44:04



In order to ensure your company qualifies for the Enterprise Investment Scheme ("EIS") there are certain questions you need to ask firstly.

Below is a basic quiz to ascertain whether your company qualifies. If you answer no to any of the questions - then your company may not qualify for EIS. But as with everything, the devil is in detail, so check with your adviser (or us) before giving up.

1) Is your company a private unlisted company?

If you answer "no" you may not qualify for EIS.

Your company cannot be listed on a recognised stock exchange and there must be no arrangements in place for it to be become listed (there is an exception to this rule as certain exchanges are not "recognised" exchanges so quoted companies may still qualify for EIS, for example if they are on ISDX and AIM).

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Topics: EIS

Autumn Statement 2016 Implications for SEIS, EIS, and SITR

Posted by Vasiliki Carson, Sapphire Capital on 24-Nov-2016 11:33:42


We were eagerly awaiting to hear the 2016 Autumn Statement in order gain some insight as to how the government proposes to deal with the resulting market uncertainty created by the Brexit referendum, and what the new prime minister and her cabinet are seeking to achieve.

The main take-away points were:

  1. Productivity of the UK workforce is a main focus for improvement, and the government plans to do this by creating a £23 billion Productivity Investment Fund to promote innovation and infrastructure; the money is to be used primarily for housing, transport, telecoms and R&D projects. This funding will flow through the British Business Bank in order to improve prosperity and commerce in regions outside London, and in particular for the North of England.
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Topics: EIS, SEIS, SITR

Invitation to Sapphire Capital's "Raising Capital" EIS Event

Posted by Vasiliki Carson, Sapphire Capital on 06-Nov-2016 17:28:45


There has never been a better time to set up a company in the UK. The government support offered by both the Seed Enterprise Investment Scheme ("SEIS") and the Enterprise Investment scheme ("EIS") provides start-ups with an excellent method to attract much needed capital in order to get a company started.

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Topics: EIS

Breaking SEIS/EIS rules - what are the repercussions?

Posted by Vasiliki Carson, Sapphire Capital on 24-Oct-2016 09:21:47

 

SEIS and EIS facilitate private investment into companies by providing investors generous taxincentives, such as income tax relief, capital gains tax deferral, inheritance tax relief and loss relief. A great summary of investor incentives can be found on the infographic that we created for a prior blog: SEIS versus EIS - a visual comparison.

 

One of the requirements for companies to qualify for SEIS and/or EIS, is that they must continue trading for at least three years from the time the SEIS/EIS shares are issued. This requirement reinforces government’s commitment to support entrepreneurship and permanent job creation within the UK. Government wishes to support medium to long term company trade, and we have seen a tightening of the rules around the schemes to ensure that they serve this purpose.

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Topics: EIS

Conflicts of interest that may arise in SEIS and EIS investing

Posted by Vasiliki Carson, Sapphire Capital on 26-Aug-2016 21:49:55


Over the summer months, I caught up with some long overdue television viewing time, and came across the American TV series “Billions”.   For those that haven’t heard of it, the story is about a successful hedge fund manager, Bobby Axelrod, who is being investigated by the U.S Attorney for the Southern District of New York, for suspected insider trading.  The complexity in the plot occurs due to a “conflict of interest”, as the U.S. Attorney’s wife works for Bobby’s firm, as a key person employee and investor.

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Topics: EIS

SEIS / EIS advance assurance for foreign companies - is it really possible?

Posted by Boyd Carson, Sapphire Capital on 14-Jun-2016 15:24:19

 

Short answer: yes it is. At Sapphire we are increasingly being asked to obtain SEIS and or EIS advance assurance for foreign-based companies. Contrary to popular belief, this is a popular structure. We recently obtained SEIS and EIS advance assurance for a company based in Malta (link to example), EIS advance assurance for a company in the United States (link to example) as well as one based in the Netherlands (link to example).

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Topics: EIS, SEIS

Structuring SEIS, EIS and SITR funds - current issues

Posted by Nick Rutter, Maclay Murray & Spens LLP on 13-Apr-2016 16:47:36

As the latest wave of EIS and SEIS offers subsides, and we enter the new tax year, we look back at some of the issues we have come across while advising our clients on setting up investment structures in this space:

Stand-alone or fund?

Economies of scale will often mean that a fund is a cost-effective approach where a stand-alone offer for a single corporate would not be, particularly in the SEIS space.  However, given that the maximum raise under EIS is now £5,000,000, there can be times when a single company EIS offering makes sense – particularly given AIFMD issues.

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Topics: EIS, SEIS, SITR

Can a founder claim EIS or SEIS relief?

Posted by Violet Spence, Sapphire Capital on 30-Mar-2016 12:25:14


At Sapphire Capital Partners we meet many entrepreneurs who have great business vision and are keen to pursue their ideas through one of the business tax incentive schemes; Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), or Social Investment Tax Relief (SITR).

One of the areas where we are frequently asked for advice and guidance is in the area of founder shares, and more precisely, can the entrepreneur or owner of the company benefit from the above mentioned tax schemes?

And the answer to this is that it all depends on your relationship with the company, with the key question being, “Are you connected with the company?”

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Topics: EIS, SEIS

On winning the EIS Association's "Best Innovation Newcomer" award

Posted by Boyd Carson, Sapphire Capital on 16-Feb-2016 20:43:15

 

Let me start by saying how delighted I am to have been awarded the EIS Association's ("EISA") award for Best Innovation, Rising Star for 2015 at last week's reception in Westminster Abbey's House of Lords.  It means a lot to me to be recognised by the EISA, as I greatly value the body's efforts in raising awareness of the EIS, SEIS and SITR schemes, as well as acting as an intermediary between HMRC/government and the private sector.  Looking at the recent statistics of the schemes' adoption and how much investment has been raised through them, I am very much honoured and humbled at being acknowledged as playing a part in this sector of risk finance.

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Topics: EIS

Why SEIS / EIS Inheritance Tax Relief should matter to you now

Posted by Vasiliki Carson, Sapphire Capital on 26-Jan-2016 11:06:13

 

You may have seen my video blog on Sapphire’s website where I give a high level overview on the incentives offered by the Enterprise Investment Scheme (“EIS”) and the Seed Enterprise Investment Scheme (“SEIS”).  I now want to delve into a little bit more detail on their Inheritance Tax Relief (“IHT”) incentive as David Bowie’s carefully orchestrated departure from our world got me thinking a little more about the importance of planning for the end. Because we all know that death and taxes are unavoidable, the relief offered by the schemes on estates makes investing in these products relevant to a much wider population than what you might have originally thought. 

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Topics: EIS, SEIS, EIS tax reliefs

SEIS and EIS - what trades are excluded?

Posted by Violet Spence, Sapphire Capital on 14-Dec-2015 14:08:00


The Enterprise Investment Scheme (EIS), and Seed Enterprise Investment Scheme (SEIS) offer very attractive benefits to investors. Investors can only claim tax relief if the company meets certain conditions, one of these being the type of business which it operates.  

We are often asked for our advice on whether a business will qualify for these tax reliefs and with our wide experience in this area we can offer our view based on our past clients and dealings with HMRC. The rules laid down by HMRC give an overview but not all businesses fit neatly into them, and there will always be grey areas.

Most trades qualify but there are a number of excluded activities in each of these schemes. It is important to remember that activities are only excluded if a substantial element of the company’s trade consists of the ‘excluded’ activity. There is no formal definition of ‘substantial’, but a general rule is no more than 20% of the trade. This 20% benchmark applies to the company as a whole, so the parent company may well qualify for SEIS or EIS status whilst a subsidiary may not.

So let’s look at what the rules currently dictate for trades excluded from EIS and SEIS: 

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Topics: EIS, SEIS