UK Venture Capital Tax Relief Schemes After Brexit

Abstract

Originally published as Finance Act commentary in the British Tax Review this paper begins by briefly examining four technical changes to the UK EIS, SEIS and VCT venture capital tax reliefs made by the UK Finance Act 2016. Detailed consideration is then given to the implications that the UK leaving the European Union might have for the future parameters of these tax reliefs. Written on 31st October 2016 the analysis primarily anticipates that either the UK will sever its ties to the EU without an exit deal of any sort being concluded, or that the UK’s departure from the EU will be facilitated by way of an EU/Canada style trade treaty incorporating the WTO 1994 Uruguay Round Subsidies and Countervailing Measures Agreement. The impact of the EU State aid rules manifested in the Risk Capital Guidelines and the General Block Exemption Regulation are compared and contrasted with those of the WTO SCM agreement. The discussion centres particularly on the constitution of a WTO subsidy in terms of benefit flow-through and the respective concepts of EU selectivity and WTO specificity, concluding that there are a number of significant ambiguities concerning the potential WTO treatment.