Community groups rushed to bring forward alternative energy projects following the government’s decision to axe tax reliefs from November 30, 2015.
And umbrella group Community Energy England (CEE) is threatening The Treasury with legal action about the cuts by taking the case to the courts for a judicial review.
The Treasury claims some community energy schemes were abusing stamp duty tax rules while raising investment through the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Social Investment Tax Relief (SITR), so decided to remove the tax breaks at short notice.
Community Energy England chairman Philip Wolf explained that community groups would be ‘disadvantaged’ by the removal of tax reliefs.
“This is a real problem for us because the decision introduces uncertainty in the sector,” he said.
“If the regulator or government can change policy at such short notice, people make plans only to find the requirements have changed later. Investors need certainty or will stay away from funding these important projects.”
The Treasury has yet to reply to the CEE letter.
Award for virtual SEIS and EIS share exchange
If you invest in a company backed by government tax breaks, your money is tied up for three years unless you sell your shares back to the company.
But a new virtual share exchange for SEIS and EIS investors has just won an award for innovation.
The exchange is run by investment firm Mercia Fund Management.
The exchange allows investors to sell shares to other investors rather than back to the SEIS or EIS company.
Just like any other share selling platform, the exchange lists shares for sale, the bid and offer price. The exchange also alerts investors when a new funding around is available.
The exchange allows investors to exit a SEIS or EIS, but does not stop HM Revenue & Customs (HMRC) reclaiming any tax breaks if the shares have been held for less than three years.
“The exchange is not aimed to help investors leave their SEIS or EIS before the three years are up, but to give them more control and access to their cash if their circumstances change,” said a Mercia spokesman.
