BHA Lobbies on EIS Scheme
-??would open the door to new funding opportunities?
6 February 2012:?? The British Hospitality Association is lobbying the government to allow hotel operations to qualify under the Enterprise Investment Scheme, following the Chancellor?s failure to remove the restriction in the autumn statement.?
The scheme was introduced to help smaller companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.?? Hotels were originally able to qualify under the scheme but were disqualified in 1998 under the new Labour government.? In recent years, a source of outside funding would be of great value to the industry, given the current funding difficulties that many businesses face.
The BHA was led to believe that an announcement to remove the restriction on investment in hotels from 6 April 2012 would have been introduced in the autumn statement or in the draft Finance Bill clauses which were published in December?
Martin Couchman, deputy chief executive, described the continuing restriction as ?very disappointing?,
?We had many indications that the restriction would be removed but this did not happen.?? At a time when many small and medium sized hospitality businesses want to expand and develop, the EIS scheme would have opened the door to new funding opportunities.??
?There is currently a ?7m maximum gross asset rule but the draft Finance Bill includes an increase to ?15m, subject to EU State Aid approval, which is not expected to be a problem.???
?The change would have been potentially very good news for many businesses ? and their investors – because it would have encouraged investment in the industry through new sources of finance.?
Mr Couchman said that the association was continuing to press the Treasury.
?We cannot understand why independent hotel operations were ever disbarred from benefiting under the scheme.?? One of the government?s principal objectives is to encourage investment in industry and the EIS scheme has the potential to encourage independent hospitality businesses to expand and develop.? We shall continue to argue that the scheme is highly relevant to hotel operations.?
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