The EIS Association (EISA) is the official trade body for the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) industry.
On the EISA’s new guide on managing the risks, Director General Mark Brownridge said: “The Treasury is keen to encourage investors to support enterprise in Britain. But equally, it recognises that an investment in a start-up or SME business carries significant risk to the point where potentially an investor could lose all their initial capital. To compensate for this risk, the Treasury offers investors generous tax reliefs.
“HMRC recently amended rules that enabled investors to benefit from these tax reliefs while investing in low-risk, asset-backed schemes. These schemes were not without risk — if one investment failed it was possible that the returns from the others would not outweigh losses. But that ship has sailed.
“So is what we are left with too risky to contemplate?
“Risk is something that always makes a sensible investor nervous. But with risk should come reward and our members can offer plenty of examples of exits that have delivered handsome rewards for investors. Don’t forget risk builds trust, not vice versa!
“If you understand risks you can mitigate them and improve your chances of success. This guide is designed to help you do just that. We hope it will encourage informed and helpful discussions between advisers, investors and fund managers so that investments in EIS are made in knowledge and confidence.”