EIS knowledge intensive fund consultation

HMRC’s consultation on the possibility of a new fund structure to enhance venture capital investment in high growth knowledge intensive (KI) companies closed on 11 May 2018. The consultation proposed a new fund structure as part of the existing enterprise investment scheme. At this stage, the government’s thinking is at a high level. The consultation document merely sets out certain criteria that any fund structure must meet and then a series of alternative options for additional tax incentives. Each proposal is not without merit, but it seems unlikely than any option on its own will lead to the step change in ‘patient’ capital investment for KI companies. A better approach might be to move away from building on the current EIS regime and instead consider a simpler, more focused, regime with increased limits.