Innovation In The Tax System

Publications from the Office for Tax Simplification ("OTS") often lead to changes in UK tax law, so the "Business Lifecycle Report" merits close study. The Report looks at key events in the lifecycle of a business and considers the 'complex patchwork' of tax charges and reliefs that occur at different stages in a business's life. 

The Report identifies a number of reliefs available to shareholders – EIS, SEIS, VCT, Investor's Relief and Entrepreneur's Relief – and assesses the extent to which they are targeted and their respective costs. Notably, Entrepreneur's Relief cost £4.2 billion in 2015/2016, with the Report concluding that its place and its purpose warrants "a closer look". The Report also considers the effectiveness of certain reliefs, identifying that founders and their advisers may be more familiar with the EIS regime than the VCT regime. It notes that the constraints imposed by EIS and SEIS often cause investors to lose reliefs and companies to