|
Could Tax Change Affect Your Start-up?
 Small
businesses in high-risk industries,
especially those which rely on start-up
funding from individual wealthy investors,
are likely to be hit by an immediate change
to the tax regime, PKF Accountants &
business advisers have warned.
HM Revenue & Customs has today announced
that it is ending 'sideways loss relief' for
capital contributions made by individuals
who are non-active partners in a business.
Where the "main purpose or one of the main
purposes" of the investment was to access
trading losses, tax relief can no longer be
claimed on those losses.
'Sideways loss relief' encouraged
individuals to invest in high-risk ventures
by allowing them to write off initial losses
against their tax bill while opening up the
opportunity for (taxable) profits if the
venture succeeded.
The UK film industry,
bio-tech and "green" research businesses
have been particular beneficiaries of the
practice in recent years.
Peter Penneycard said: "The BBC's Dragon's
Den program has shown us all how hard it can
be to raise finance for a start-up business.
Loss relief has been a feature of investment
partnerships for many years and reduced the
initial risk for individual investors -
making it easier for businesses operating in
high-risk sectors to secure start-up
funding.
"Today's announcement has effectively cut
off a ready source of investment capital to
such businesses. Many prospective businesses
will have to look much harder to find
alternative funding. It is going to be
particularly difficult for those operating
in sectors like biotech or film where
returns can be high but the chance of
failure is equally great."
More information on how factoring can help
startup businesses with finance.
|
