Press Room
Positive changes to Enterprise Investment Scheme but media
investors still burdened by red tape, says Grant Thornton
Despite the announcement in the Pre-Budget Report
(PBR) of the long-expected clamp-down on the use of the Enterprise
Investment Scheme (EIS), media investors will continue to
face a complex burden of red tape, says financial and business
advisor Grant Thornton UK LLP.
The EIS, a significant funding mechanism for many media
businesses, was designed to help smaller higher-risk trading
companies raise finance by offering a range of tax reliefs to
investors who subscribe for new shares in those companies. However,
having previously been subject to perceived abuse by some
financiers, the Treasury laid out its intention in the PBR to
consult on how to ensure the EIS scheme is targeted appropriately
at small businesses. The Treasury will now disqualify a company
from the scheme where 90% of the business is not conducted directly
by the company within the first three year period.
Despite this action, the PBR delivered neither changes to
the complex provisions to allow greater flexibility for investors,
nor an extension of the Film Tax relief to other media
industries.
Liz Brion, Media and Tax Partner at Grant Thornton says:
"The changes to the EIS challenge the well known method of
parallel investments, where investors set up more than one
partnership to invest into a media company for tax purposes, and
this looks like it is coming to an end. In spite of this, what is
missing are changes to truly promote the spirit of the
legislation.
"Financiers of media companies face a complex set of rules
in investing under the EIS. It was hoped that this process would
have been made easier, together with an increase in the amount of
tax relief to encourage investment.
"Other media industries such as animation and gaming, had hoped
to receive a similar tax relief to that given to film. It is
disappointing that this was not announced this year. The UK needs
to compete internationally in areas such as animation and a lack of
Government support means that we will see fewer home-grown
businesses and productions develop on our soil."
For further information, please contact:
Stephanie Aneto, Grant Thornton press office, tel: 020 7728 2940 or
email: stephanie.aneto@gtuk.com