It’s really a matter of paperwork
Investing in new businesses is generally higher risk than investing in existing ones, since businesses that have survived have hopefully learned something. This can make it difficult for entrepreneurs to raise capital to get their business going, leading to the government allowing some pretty good tax breaks for investors in new businesses. These tax breaks include Enterprise Investment Schemes (EIS) and Seed Enterprise Investment Schemes (SEIS)
In practice, this means lodging the appropriate paperwork, completed properly, in time, sometimes even on separate days in some stages of the process and perhaps having separate bank accounts for different categories of money. Regarding the latter for example, you may think, I’m in charge, it’s my business so I can run my business as I like? Well yes, but if you want the tax relief, being sloppy can be very expensive and if it sounds complicated – well it is. Here we get back to one of my mantras from when I was a practising IFA, use a specialist for whatever job you need doing, rather than a guy who does this occasionally.
* Money has to be in the (appropriate) bank account before EIS shares can be issued and they have to be fully paid up.
* HMRC can be inconsistent since being such a huge organisation, one rarely gets to speak to the same person twice. Safest to write in but HMRC are slow with 8 weeks being an average answer time for EIS/SEIS stuff. This means if you want to put an EIS investment on your January 2015 tax return, put your paperwork in now. Without the EIS certificate number, no tax relief.
* Just to help you even more and make you feel better, all HMRC post goes out via a central post office up in Liverpool where it takes 12 days from the tax officer’s desk to being sent out.
The price for getting it wrong means losing the tax relief. Your chums who backed you in the business may be pleased with the business doing well and the share price being much more than when they bought the shares, but will be seriously upset to receive a huge capital gains tax bill when they want to take their profits.
Alice Holden & Fleurette Mulcahy of Attollo Lingerie have identified a sector in bras for big women DD+ where 81 per cent of the women surveyed were unhappy about shopping for one that fits comfortably. The company name Attollo unsurprisingly means uplift among other things Most curious thing about this presentation was that all of the questions to the two ladies were from men?
Avenue to your Own Business
Going from barrister to CEO in her own business, Dupsy Abiola established InternAvenue so that businesses can get decent interns quickly. She also joined a small club of entrepreneurs who have turned down Dragons’ Den. Blog readers may remember The Man who Turned Down Dragons’ Den Unlike days when I was a student when student loans were unheard of and you got grants as well, a couple of decent internships is necessary to get a decent career post these days.
As well as a very impressive management team including Amir Eilon who helped take Easy Jet from 4 planes to over 60, Intern Avenue also has revenue. This makes it attractive to many potential investors, many of whom are deeply uninterested in something that is just an idea on paper.
To give an idea of the quality of the presentations which are vetted by Colin Spiller who also works with Angels’ Den, all the above have won new business competitions (Intern Avenue has won 6) or been given grants.
Next 3Cs meeting is 2nd December 2014 at Reed Smith with one pitching slot available. More are currently available for 3rd February 2015 meeting at Nabarro. Call 07770 465 011 if you have a presentation ready.