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EMMA WISE discovers that it can prove advantageous for a company to be incorporated in Scotland
KEY POINTS
- Anti-dilution provisions applied wrongly to EIS shares.
- Rectifying the articles to reflect the original intention.
- Rectification may not be retroactive under English law.
- The advantage of applying Scots law.
- New precedent with HMRC.
The enterprise investment scheme (EIS) is undoubtedly one of the highest risk areas for the tax adviser.
The consequences of incorrect advice can be disastrous for the investee company which will often have attracted investors specifically due to the tax reliefs that they believe they will obtain as a result of investing in EIS shares.
The future prospects for a company that has failed to obtain the promised reliefs for its investors are at best uncertain. And if the tax adviser is at fault there is no doubt a chunky professional indemnity claim on the horizon.
We...
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