View more on these topics

Ben Yearsley: VCTs must keep investors in the loop

Yearsley-Ben-Charles Stanley-peach.jpg

The Government and HM Revenue & Customs do not like limited life venture capital trusts and have not done for some time, because they are essentially companies that get tax breaks for no apparent reason.

They have made several attempts to tighten the rules around where tax breaks are permitted. But they have been a bit more heavy-handed recently, after HMRC guidance made it appear VCTs would lose their tax efficient status if they issued new shares.

All VCT managers have been pretty nervous about this specific guidance and it has resulted in them issuing no shares so far this tax year. 

This could be a bit of a blunder on behalf of the Revenue – which is obviously not helpful for either VCT providers or investors – although some managers I have spoken to think this is a deliberate move.

Regardless, VCTs have a duty of care to investors. 

Many people have invested at the start of the tax year so that they can achieve a particular tax code. The HMRC wording puts this in jeopardy and VCTs are currently failing to communicate this to investors. 

They should be writing to everyone stating why they cannot currently issue new shares, the background of the HMRC guidance and what they intend to happen in future.

If the rules stay as they are, it will be disastrous for VCTs. Nobody will want to launch new VCTs because they do not really work any more. 

Top-ups on existing VCTs under the old guidance are great but setting up new ones is not as straightforward as it used to be

Ben Yearsley is head of investment research at Charles Stanley Direct

Recommended

Business-Handshake-Meeting-Deal-Low-Angular-700x450.jpg

James Hay parent hires Barclays investment director as chief exec

IFG Group, the parent company to wrap provider James Hay, has appointed Paul McNamara as group chief executive. Subject to regulatory approval, McNamara will join IFG on 28 July. Group finance director John Cotter has been acting as interim chief executive after Mark Bourke stepped down from the role in April. McNamara is currently managing […]

Devey-Rob-700.jpg

Towry eyes Baker Tilly advice arm acquisition

Towry is to acquire the advice and investment management arm of Baker Tilly. Accountancy firm Baker Tilly acquired RSM Tenon – an accounting, advice and employee benefits firm – in September 2013 shortly after it entered administration. All three divisions of RSM Tenon were rebranded under the Baker Tilly name.  Baker Tilly has been keen to offload […]

Sick-Note-Currency-Ill-GBP-Pounds-700.jpg

How the IPTF is hoping seven families can shake-up protection

Income protection is “historically undersold”, with only 91,000 individual policies sold last year despite a potential market of 20 million people. People are more likely to find themselves unable to work due to injury or illness but confusion over how much state benefits pay out in the event of unemployment has left IP sales lagging behind life and […]

Book-and-Gavel-Justice-Fine-Ban-700x450.jpg
4

FCA to appeal legal aid ruling

The FCA is seeking to appeal the controversial decision to throw out a land banking fraud case after legal aid cuts prevented the defendants from getting legal representation. Yesterday Money Marketing reported that the case against five men charged with land banking fraud and had been thrown out by Southwark Crown Court on the grounds […]

Neptune’s Burnett looks beyond Greece

Watch Rob Burnett, manager of the Neptune European Opportunities Fund, discuss the Greek bailout deal and its potential implications for European equities. In the video Rob discusses: Why, with the Greek crisis receding, markets can now focus on Europe’s strong fundamentals The resilience of European markets and why the recovery is on a solid footing […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. “The Government and HM Revenue & Customs do not like venture capital trusts and have not done for some time”

    This is a strange statement – if the government did not like VCTs they could quite easily get rid of them. It would be more accurate to say “the government does not like it when VCT managers bend the rules to benefit from tax breaks without taking risk”. This is what they are clamping down on, hence the attempt to stop VCTs from paying out immediate dividends using freshly raised money that hasn’t even been invested yet!

    Properly managed VCTs deliver a key part of government policy in that they encourage private investment into UK business at a time when finance is still otherwise hard to come by.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com