On the first glance, It does not seem likely that the UK government would be that generous with its revenue. Nevertheless, these tax reliefs are available to investors in certain instances.
To be eligible for the relief, the company seeking the investment must have:
- A permanent establishment in the UK for a period of 3 years from the issue of the shares.
- All the money raised by the share issue must be used within two years in a ‘qualifying trade.’
- The trade must be carried on by the parent company or subsidiary which is a 90% subsidiary for a period of 3 years from the issue of the shares.
I guess the reasoning here is that if the company establishes a permanent establishment in the UK this must lead to some of the investment being made in this country which can only help better the economic prosperity of the country.
Spundge, a Canadian company, is currently raising EIS funds on www.crowdforangels.com. They have established a UK subsidiary and a London office as part of this process. Andrew Edwards of Spundge stated, “Raising investments for the UK subsidiary that is going to be responsible for driving forward its international development, through its London Office was made considerably easier with the availability of EIS tax relief for UK investors, to be able to invest via the Canadian Holding Company. That way investors can invest in the entire Spundge operation, including its intellectual property as well as all its international business.”