Enterprise Investment Scheme (EIS): How do the rich really avoid paying their taxes?

So, how do the “Rich” avoid paying their taxes? Well one answer according to Channel 4’s recent Dispatches episode is by abusing EIS and Film Schemes in combination.

What did not come across very well from the tv programme was that, in fact, the EIS part of the tax planning seemed wholly legitimate and that the particular provider of the planning in question then used the 30% income tax refund obtained under EIS to invest in a film scheme along with a 70% 3rd party loan (which may or may not have been non-recourse, it was not clear) which would then enable the taxpayer in question to obtain disproportionately larger tax benefits by only risking 30% of his capital.

EIS is a very valuable tax relief that enables unquoted trading companies to raise finance, whilst enabling the investor to ‘lock in to’ very generous tax reliefs.

Provided the paperwork is done correctly all conditions are satisfied, this relief should not be overlooked when setting up a trading company or investing in an established one.

With expert knowledge and experience of EIS, contact us for advice.

HMRC Key Statistics – July 2015

Enterprise Investment Scheme

  • Since the Enterprise Investment Scheme (EIS) was launched in 1993-94, almost 22,900 individual companies have received investment through the scheme and over £12.2 billion of funds have been raised.
  • Provisional data for 2013-14 shows that 2,710 companies raised a total of £1,457 million of funds under the EIS scheme. In 2012-13, 2,465 companies raised £1,032 million of funds.
  • Provisional data for 2013-14 shows that companies raising funds for the first time under the scheme raised a total of £771 million compared with £576 million in 2012- 13.

Seed Enterprise Investment Scheme

  • In 2013-14, almost 2,000 companies received investment through the Seed Enterprise Investment Scheme (SEIS) and £164 million of funds were raised (provisional data). This compares with 1,155 companies raising a total of £86 million under SEIS in 2012-13.
  • Almost 1,700 companies of these companies were raising funds under SEIS for the first time in 2013-14 – representing £148 million in investment.

If you have any queries relating to the above please give us a call.

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