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BES gets go-ahead, finally

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01-11-2004 2:05pm

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dahamsta

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BES gets go-ahead, finally
Monday, November 01 2004
by Ciaran Buckley

After keeping cash-starved start-ups on tenterhooks for almost a year, the European Commission has approved the government's BES and SCS programmes until 2006.

The Business Expansion Scheme (BES) allowed individuals to invest in businesses for a minimum period of five years. The tax paid on any money invested in the scheme is refunded to the investor by the government at the beginning of the scheme, which often meant that investors got a 42 percent return on their investment at the beginning of the investment term. At the end of the five years, investors stood to recoup their initial investment as well as getting a return on their investment. Investments could be made in companies involved in manufacturing, services, tourism, and research and development sectors. Under the Seed Capital Scheme (SCS), individuals who are starting a business get a rebate on taxes they paid in previous years. The size of the rebate depends on the amount of the individual's investment and their effective tax rate.

The current form of these schemes was set out in last year's Budget. The schemes were to operate from December 2003 to December 2006, but because the European Commission chose to investigate the permissibility of the schemes under EU law, they haven't yet gotten off the ground.

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