The decision comes in reaction to the changes made in last week’s budget that restrict further investment by venture capital vehicles.
New rules mean that as of 6 April 2007, VCTs will no longer be able to invest in companies with more than 50 employees, with those that are still eligible not able to raise more than £2m in VCT funding per tax year. To counteract this, VCT managers have been given more flexibility in remaining within the qualifying investment limits.
Close Ventures managing director Patrick Reeve says: “While some of these changes are helpful, others are less so. Those affecting the size of the company and the amount invested are quite a suprise and appear to be in response to an EU directive focusing on Government assistance to industry. They could certainly have an impact on demand for VCTs in the future and we would like to explore these further with the Treasury.
“The important thing to make clear is that the changes have absolutely no impact on current VCT fundraising.”
Close Investments head of advisory sales Matthew Brown says: “We recieved over £4m in applications for the Close Enterprise VCT in the last few days before the budget, signalling the start of the usual end of tax year rush. With only a few working days left until the end of tax year we now anticipate a compounding in demand which could lead to a shortage in supply from those managers with a proven track record, so we have aimed to increase capacity to accommoadate this.”