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HMRC gets serious on abuses of EIS, says Oxford Capital

HM Revenue & Customs intends to consult on how to ensure the enterprise investment scheme is targeted appropriately at businesses.

Richard Hoskins (pictured), manager private client services at Oxford Capital, says some providers have been using limited partnerships to abuse the EIS rules. 

“If advisers and investors back products aiming to take advantage of the generous tax breaks, against the spirit of the legislation, they are exposing their clients to significant additional risk and a number of popular tax avoidance schemes have been removed from the market in recent weeks,” says Hoskins. 
 
He believes EIS is the most compelling tax planning opportunity for advisers. 

“With the writing on the wall for higher rate pension tax relief, investors and their advisers need to get familiar with EIS, before their competitors do. The RDR has created a flight to quality with all IFAs frantic to focus on developing the quality rather than the quantity of their clients. Not all IFAs can be successful at this, but by becoming more knowledgeable about tax planning they increases their chances. 

“The better advisers also take time to educate their clients. By introducing their clients to tools such as EIS funds and growth capital, as the tax burden increases and the investment climate remains challenging, advisers will find life much easier," Hoskins adds.

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