Bristol tech companies could have their growth plans scuppered by new rules introduced in this year’s Finance Bill, accountancy firm Baker Tilly is warning.
Government initiatives such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) have been successfully used by small tech firms over recent years to raise funds as they offer attractive tax breaks.
EIS helps investors purchasing shares in small private companies while SEIS is aimed at those investing in micro businesses. 
Both schemes, along with Venture Capital Trusts (VCTs), have raised billions of pounds worth of funding for small businesses and helped drive investment in many companies – particularly in the tech sector.
But stricter rules affecting them were introduced in recent Summer Budget and Finance Bill as a result of EC direction which Baker Tilly’s experts say could harm some businesses’ growth plans.
These new rules impose:
* A limit on the age of a company that can apply for EIS or VCT finance. The Government had initially proposed an age limit of 12 years, but this has now been reduced to seven in the Finance Bill, albeit with some exceptions.
* A limit in the total lifetime risk finance funds which are raised by a company of £12m – £20m for knowledge intensive companies.
* The rule that no VCT or EIS funds are to be used for the acquisition of other companies or trades.
Baker Tilly head of corporate finance in the South, Kirsty Sandwell, pictured, said: “These new rules will only add to the existing complexity of these important and successful schemes, and I’m concerned that high-growth technology businesses such as software companies will inadvertently be the victims of new legislation.
“These new rules could deter acquisitions made to compliment or further develop existing technologies or create wider market applications, and yet ironically it is these very companies that George Osborne is keen to help grow in the UK. It’s very possible that the Government inadvertently may have switched off the tap to a vital source of funding for many businesses.”
