Two weeks ago, I looked at the Business Expansion Scheme (BES) as part of DCA Accountants and Business Advisors’ investment advice series. An extension to the BES is, of course, the Seed Capital Scheme, which is another tax refund for new enterprises.
The Seed Capital Scheme is very similar to the BES but what makes it potentially more attractive is that it provides for a refund of tax on an investment already made by an individual. That investment can be offset against the previous six years of PAYE income that an individual has earned and there’s a real opportunity to obtain a sizeable tax rebate up to €100,000.
The scheme is particularly attractive for anyone who has been on a good salary for a number of years. If someone has been made redundant recently, for example, he or she can use their redundancy payment to set up a new business that may qualify for the scheme under Revenue rules. If money is invested in the business it can be offset against the previous six years of income to trigger a tax rebate, meaning the cost of investing in the business is drastically reduced.
There are restrictions on the type of businesses that are eligible for investment, however. For starters, an individual who invests must enter into a full-time employment contract for at least one year, either as a director or as an employee. The second condition is that there are limits on the type of company that can qualify – the main categories for qualification include companies in the manufacturing industry or internationally traded services, while those involved in commercial research or development activities are also likely to meet the necessary criteria. The common theme, as you’ll have noticed though, is that innovation is required to qualify.
Companies seeking approval for the scheme should apply in the first instance to their County Enterprise Board for initial approval – by doing so, a company can fast-track its application to the Revenue for approval of seed capital relief. Your application will then be dealt with by the Revenue Commissioners’ branch in Dublin Castle.
The process itself may seem long and arduous but it’s worth it – right now the success rate for applications is particularly high given that the Government are doing all they can to incentivise people to invest in projects that are likely to create employment here. If the business plan is fundamentally sound and approval has been granted by a county enterprise board, the chances of success increase significantly.
At DCA Accountants and Business Advisors, we can help with applications for County enterprise board grants and also qualification under the Seed Capital relief scheme and assess whether or not a plan is likely to be approved at all levels. Once we have reviewed a business plan, we can point out areas where improvements need to be made therefore maximising the chances of success.
When we look at a business plan and application for any kind of investment, we can generally conclude very quickly if it will be successful in the approval process – our background when dealing with these matters is quite extensive and a number of our clients have secured investment through schemes like this after consulting our advisors. Like those that make the final decisions on applications, we closely scrutinise a business plan against the key criteria of the grant or investment scheme that a company is applying for and see how it measures up. If it does, then we can help with the necessary paperwork; however, if tweaks or adjustments need to be made in any area, we can point them out to give you and your business the best possible opportunity to qualify.
DCA Accountants and Business Advisors
For more on our services or to receive a free consultation for your business from one of our experts, visit www.dca-ireland.ie