Raising Investment with EIS and SEIS
Raising Investment with EIS and SEIS males it easier for the investors to say yes as they get immediate tax relief and tax free profits after three years.
Raising Investment with EIS & SEIS
The Enterprise Investment Scheme (EIS) and The Seed Enterprise Investment Scheme (SEIS) are HMRC administered schemes set up by the UK government to offer a number of tax breaks to investors who buy shares in small, private unlisted companies.
Raising Investment with EIS & SEIS – Who invests
Investing in films is High risk v High Reward, and if invested under EIS/SEIS, profits are tax free with an unlimited upside. Even if your investment is a loss, it is possible to get 86.5% of the investment back in tax relief.
Typically these are attractive to High Net Worth Individuals or Sophisticated Investors who can take advantage of the Tax relief on Capital Gains Tax (CGT) and Inheritance Tax (IHT). Most people never see never mind pay CGT, as primary private residences and cars are exempt and most people don’t have portfolios of high earning bonds, stocks and shares, or are landlords selling properties.
So while EIS and SEIS, cannot remove all the investment risk, they can heavily mitigate any losses, you need to be paying enough tax already to take advantage of the reliefs.
Investors won’t invest for Tax Relief benefits alone, EIS/SEIS is only a sweetener. Investor wants to see a great offer, backed with great rewards. Just as importantly, investors need to believe you are the team that will make it happen.
First you must apply to HMRC to grant you Advanced Assurance for EIS/SEIS and you must wait for the return of your certificate to include in your Information Memorandum detailing the offer to investors.
Gaining EIS/SEIS certification, engaging lawyers and accountants, shows financial comprehension and competence. Most sophisticated investors will only invest under such qualifying schemes.
The Information Memorandum
So now you need to prepare your offer document. The offer must be accompanied by many legal and regulatory requirements regarding the risk around investing in start up businesses, an exit strategy, details of the film, cast and crew and finally the Investors forms, investors must sign when applying for shares, certificating they are experienced investors, who have read and understand the risks.
At Itasca we take the view as we’re in the entertainment industry these documents represent the first opportunity to show our wares and skills. So they should look and feel good, be entertaining as well as informative and compliant in pitching our great offer to investors.