Innovative UK start-ups seeking funding from a Government programme are being made to wait three times longer for investment than they were originally promised, according to the Enterprise Investment Scheme Association (EISA).
The Government’s Enterprise Investment Scheme (EIS), which allows ambitious start-ups to claim £5 million a year or a maximum of £12 million of funding within seven years of their inaugural commercial sale, is taking an average of 56 working days to process funding for qualifying businesses.
Just two years ago, the Government set a target of 15 working days, which the EISA believes is showing no signs of being met thus far. Mark Brownridge, Director General of the EISA, described the new figures as “a big issue”.
EIS funding is generated by offering tax reliefs to individual investors which, in turn, is designed to underpin the growth of innovative early-stage firms looking to disrupt a variety of sectors.
The Government’s pledge in 2017 to “streamline” EIS applications was aimed specifically at the technology sector, helping to increase venture capital funding and maintain the UK’s position as a hotbed for entrepreneurs and start-ups to thrive.
Two years ago, the Government also extended the number of start-ups that were eligible to apply for funding through the EIS, as well as Venture Capital Trusts.
When questioned on the EISA’s figures, an HM Treasury spokesman dismissed the claims out of hand, insisting that “we do not recognise these figures”.
“The truth is that over 85% of applications receive responses within 15 working days,” said the spokesman.
“The UK is creating more start-ups and attracting more venture capital funding than any other European country – just last week we injected a further £200 million into the British Business Bank to help ensure small businesses and entrepreneurs can thrive.”
Check your EIS eligibility with your TaxAssist Accountant
In order to qualify for EIS funding, HM Revenue and Customs (HMRC) requires a clear explanation of how the investment in your business meets the following criteria:
- The funds raised must be used toward the development and growth of your business
- Any investment must carry the risk that the investor will lose more capital than they could gain as a net return
At TaxAssist Accountants Queensferry we have a proven track record in helping ambitious start-ups obtain advance assurance from HMRC that their share issues are likely to qualify for EIS funding before advancing.
Our clients have benefitted greatly from our guidance throughout the EIS application process, with no delays experienced thus far from any application overseen by a member of our network.
To understand more about the benefits of EIS funding and whether or not it is applicable to you, arrange a consultation with your local TaxAssist Accountant today on 0800 0523 555 or drop us a line using our online enquiry form.