The Enterprise Investment Scheme (EIS) was designed by the HMRC to help smaller higher-risk trading companies such as Esk Energy (Yorkshire) Limited to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. There had to be a minimum investment of £500 worth of shares in any one company in any one tax year. From 6 April 2011 relief was at 30 per cent of the cost of the shares.
Once a firm has been trading for four months they can submit a form to the Small Company Enterprise Centre (SCEC). The SCEC then decides if a company and a share issue qualifies. Esk Energy (Yorkshire) Limited and its share issue qualified.
Further information about the Enterprise Investment Scheme can be found on the HMRC website.
Note from the Finance Bill 2012:
EXPLANATORY NOTES FINANCE BILL 2012 RESOLUTION 26 CLAUSE 39 SCHEDULE 7
Paragraphs 13 and 14 exclude as qualifying trades, any which consist substantially in the generation or export of electricity in respect of which the company receives a feed-in tariff under a UK government scheme or a similar overseas scheme. This applies generally where the relevant shares are acquired on or after 6 April 2012. For shares issued on or after 23 March 2011 and before 6 April 2012, a holding will still qualify providing the subsidised generation or export begins before 6 April 2012. Trades where the electricity is generated by anaerobic digestion or hydroelectric power are not excluded by the legislation. Irrespective of the means by which electricity is produced, trades carried on by community interest companies, co-operative societies, community benefit societies or Northern Irish industrial and provident societies are not affected by the legislation.