Finance Monthly Global Awards 2018 Edition

Finance Monthly Global Awards 2018 www.finance-monthly.com 45 Failure to get an AAA right first time can have serious implications for a company trying to raise investment. A further area, offering both benefit and complexity is that the relief is available for investment not only in UK companies, but also in qualifying non-UK companies. The availability to investors in non-UK companies, arises in a large way from the UK’s membership of the European Union (EU). As an EU member state, the UK cannot offer StateAid to UK companies only as this would be deemed to be discriminatory against companies resident in other EU states. Accordingly, a non-UK resident company, provided that it qualifies in all other ways, can attract EIS investment provided that it has a Permanent Establishment ( broadly a branch/office or dependent agency) in the UK. This means that the market for EIS and other qualifying Venture Capital investment is open to companies throughout the world. Certius has gained a great deal of experience in working with such companies to successfully apply for and obtain Advance Assurances of qualification. What can Certius do to assist? We offer a detailed flexible package of assistance, working with client companies, their lawyers, fundraisers, and in some case, investors themselves, to make the EIS process as streamlined as possible. Initially we will review whether or not the activity is qualifying for the purposes of SEIS/EIS/VCT. Then we will look at the Corporate structure and current asset value of the qualifying company to determine if that qualifies, advising on changes where necessary. For non-UK companies we advise on the setting up of a Permanent Establishment in the UK and assist in the registration process. This review also includes a detailed examination of the existing capitalisation of the company, and the source of that capital as well as any documents or statutes governing the company including any shareholders agreements which may or may not require amendment prior to investment being received, making suggestions for and reviewing any such amendments. We will undertake a review of or assist the company in the production of a Business plan, including profit and loss, balance sheet and cash flow forecasts, following which we will assist the company to produce an Information Memorandum and Investment Agreement that satisfies the needs of both investors and HMRC. Once the documentation is finalised we will write an Advanced Assurance Application for approval by the company subsequent to which we will submit the application to HMRC, monitoring its progress and dealing with any questions raised by HMRC. In the unlikely event that applications are not successful, we will advise the client on the best course of action for them, which will vary according to the reasons for the failure. Where applications are successful Certius will, at the appropriate time, advise HMRC of the details of the investments and request authority to issue certificates to investors confirming the availability of relief. Once this authority is received we will issue certificates to relevant investors. We will subsequently work with the client company throughout the qualifying investment period, monitoring their activity to ensure that the company remains qualifying at all time and providing such compliance services as the company might require. At the end of the qualifying period we will work with the company to determine whether or not there will be an exit for investors at that stage, and if so, assist them in determining and implementing the most appropriate route to maximise value for the company and its stakeholders. Although there a certain element of the process that are common to all companies, there are always matters peculiar to each client , which we take into account throughout the process and in particular in the design of the advice package that we provide. Certius has worked closely with clients from the UK, and overseas including the US, Australia, Switzerland and Sweden to obtain both Advance Assurances and to implement the EIS based investment process. We have worked successfully across many industry areas including companies working areas as diverse as information technology, office services, power generation, cooling and heating systems, crematoria and cemeteries. What is the future for EIS? That is a difficult question to answer. It is clear that the government needs to look at the way in which the Venture Capital schemes process is currently operated by HMRC. There appears to be chronic understaffing of the specialist unit leading to inordinate delays for applications. The use of better technology could be utilised more effectively to speed up the administration of the schemes. In our view Brexit offers an opportunity to increase the levels of investment permitted under the schemes. Once out of the EU the UK should not be constrained by EU state aid rules. It is essential that the UK government increasingly promotes investment in new and growing UK companies, and an enhanced EIS scheme is one way of doing this. The potential downside of Brexit is that the availability of EIS and other Venture Capital Schemes to non-UK companies might be withdrawn or restricted. However, given that there will be a strong imperative to promote investment in the UK from overseas, such restrictions might prove to be counterproductive. The government has not yet provided any indication on the future of these valuable tax reliefs and may not do so until after Brexit, or even after the end of the proposed transition period following Brexit. It is clear that the reliefs are important in promoting investment generally, particularly in the knowledge led sector, so we are confident that they will remain in some form for the foreseeable future. Q Q UNITED KINGDOM