Our approach is to build a relationship with you so we can gain an understanding of your business; therefore, we can ensure our work is fully aligned to your needs and expectations.
Our services and advice will have a direct impact on your business’s performance. Whether it is the accuracy of the management accounts we prepare for you, the expertise from our tax planning specialists or the vision of our strategic solutions, we can add real value to what you do.
Our services include:
We can reduce the administrative burden along the way through our virtual finance departments and support you in audit, accounts, taxation and also help you plan and implement successful exit strategies.
EIS Eligibility Flowchart
We know EIS is popular with investors and businesses, but the rules are so complicated! Mercer & Hole has therefore created a flow-chart which covers the key qualification tests simply.
Please click on the below button for more information.
In total has the company raised more than £20 million in risk finance?
In total, has the company raised more than £12 million in risk finance?
Has the company raised more than £10 million in risk finance the year up to the EIS share issue?
Has the company raised more than £5million in risk finance in the year up to the EIS share issue?
Does the company/group have more than 500 full-time equivalent employees?
Does the company/group have more than 250 full-time equivalent employees?
Was the company’s/group’s first commercial sale or did its turnover hit £200,000 more than 12 years ago?
Was the company’s/group’s first commercial sale or did its turnover hit £200,000 more than 7 years ago?
At the time of the share issue and for the next three years will at least 20% of the company’s full-time equivalent employees be carrying out R&D innovation and have a Masters (or higher) degree?
Is the company creating or has it recently created intellectual property which will be used in future for its main business acting?
Has the company’s spend on R&D or other innovation reached either:-
- 15% of operating costs in one of the three years before the EIS investment; or
- 10% of operating costs in each of the three years preceding the EIS investment?
Is there a significant risk that there will be a loss of capital invested, after taking tax relief into account?
Is the money from the EIS share issue being used directly or indirectly to buy an existing company or business?
Is the company or a 90% plus owned subsidiary company carrying out or preparing to carry out a qualifying trade?
Does the company have gross assets of more than £15 million before or £16 million after the share issue?
Is the company a subsidiary of or otherwise controlled by another company?
Is the company listed on the Stock Market (AIM + ISDX can be ignored)?
In order to evidence recently created intellectual property the company should either:
-
Produce patents or licences; or
-
Have an independent expert, e.g., a university professor in a relevant field verify it is producing intellectual property.
There is no definition of growth and development. HMRC’s view is that the factors should be reviewed at the hive of the share issue. General indications of growth ambition would include plans for increasing revenues, customer base and employees.
For growth and development HMRC has produced a non-exhaustive list of the factors that may be considered relevant; these include whether or not the company has substantial assists; and what proportion of its trade is sub-contracted.
A qualifying trade for EIS purposes is not defined in the legislation, rather there is a list of non-qualifying trades:-
-
Dealing in land, commodities or futures, or in shares, securities or other financial instruments:
-
Dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution;
-
Banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities;
-
Leasing (including letting ships on charter or other assets on hire);
-
Receiving royalties or licence fees, however, exceptions are made for intangible assets created by the issuing company or its subsidiaries;
-
Providing legal or accountancy services;
-
Farming and market gardening, woodlands and timber production;
-
Property development;
-
Operating and managing hotels and nursing homes;
-
Coal production;
-
Steel production;
-
Shipbuilding;
-
Providing services to a connected person conducting one of the above trades;
-
The subsidised generation of electricity, heat, gas or fuel.
If another company holds more than 50% of the issuing company’s shares it is controlled by that holding company.
However, the definition of control also includes a company having the power to procure that the affairs of the issuing company are conducted in accordance with the holder’s wishes, e.g., by way of an investment agreement, shareholders’ agreement, financing agreement, etc.