PARLIAMENTARY WRITTEN QUESTION
Energy: Investment (13 November 2015)
Question Asked
Asked by:
Anna Turley (Labour)
Answer
The purpose of the tax-advantaged venture capital schemes is to provide funding to smaller, higher-risk companies that would otherwise struggle to access finance to develop and grow. To target the schemes at these companies, and to ensure investment is not crowded out by low-risk investment opportunities, the schemes exclude certain activities from qualifying for investment under the schemes.
The list of excluded activities is updated as necessary to exclude activities that are able to access finance from the market and which may therefore be regarded as lower risk. These include asset-backed activities, such as property dealing and development, leasing of assets or exploiting acquired copyrights, general financial and professional services, and financing activities that can divert the tax reliefs to non-qualifying activities. For these activities, a lack of proven track record is unlikely to affect the company’s ability to access finance. In addition, such activities are likely to have collateral against which loans can be secured.
In recent years, the Government has been concerned about the disproportionate amount of tax-advantaged investment in certain energy generation activities. Their asset-backed nature makes it easier for these activities to access mainstream finance. Therefore the Government has taken several steps to exclude certain types of energy generation from the schemes, including in 2012, 2014 and 2015.
The Government keeps all tax-advantaged venture capital schemes under review, and makes changes where necessary to ensure the schemes remain well-targeted and effective.
Answered by:
Mr David Gauke (Independent)
18 November 2015
Contains Parliamentary information licensed under the Open Parliament Licence v3.0.