Tax & Trusts

052 | July 2015 Budget changes impact VCTs and EIS

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  • Andrew Sherlock, Partner, Oxford Capital
  • Roger Blears, Senior Partner, RW Blears LLP
  • Paul Latham, Managing Director, Octopus Investments

Learning outcomes:

  1. How the July 2015 Budget changes impact VCTs and EIS
  2. Why the Chancellor has made these changes
  3. What existing and new investors need to do to benefit fully from VCT and EIS tax breaks


Tax & Trusts
Learning outcomes: 1. How the July 2015 Budget changes impact VCTs and EIS 2. Why the Chancellor made these changes 3. What existing and new investors need to do to benefit fully from VCT and EIS tax breaks Tutors on the panel are: Andrew Sherlock, Partner, Oxford Capital Roger Blears, Senior Partner, RW Blears LLP Paul Latham, Managing Director, Octopus Investments The impact of the July 2015 Budget on EIS, VCT and BPR ANDREW SHERLOCK: Well I think the first key point is that it doesn’t affect any existing investors. So anybody who has an existing EIS investment is unaffected. In terms of the changes going forward, there are changes on the age of the company that you can invest in, the amount that you can invest in, and also the type of assets that you’re allowed to invest in whilst also receiving EIS benefits. I think some of the detail is to be ironed out, but broadly that’s the picture. PRESENTER: And you said for existing EIS investors it’s no change, existing EIS investors up to what date? ANDREW SHERLOCK: Well up to right now, in the sense that if you have an existing EIS investment it is completely unaffected by these rules. It’s only future EIS investments which particularly from Royal Ascent, which is expect in October, Royal Ascent of the Finance Bill. PRESENTER: So changes on EIS will come in from October is the key point. ANDREW SHERLOCK: That’s my understanding, yeah. PRESENTER: Roger Blears, what are the main changes for VCTs? ROGER BLEARS: Similar to EIS, but because VCTs are continuing investment vehicles they have other wider concerns that EIS fund managers have to deal with. But the changes come in from the same date, Royal Ascent in early October. PRESENTER: Now the other area of tax wrap products people are always interested in is business property relief, is there much in the budget that affects that? ROGER BLEARS: No. PRESENTER: So if you’ve got anything with BPR you’re safe and sound and don’t have to worry. ROGER BLEARS: Indeed. PRESENTER: Thank you for that. Paul Latham, if we can bring you in here. Are the changes that are coming in, they sound pretty similar for EIS and VCT. PAUL LATHAM: That’s correct. Changes to VCTs PRESENTER: But are they more onerous for VCT than they are for EIS? PAUL LATHAM: Just a bit more complicated, because as Roger said there’s the continuity of a VCT that you don’t get for an EIS. EISs are individual investments, whereas a VCT is a pool investment that the VCT will continue, and having realised one investment will make another one, so that brings some additional complexity. But it’s the sort of thing that we see every year, or almost every year in the VCT and EIS legislation, they’re always tweaking and changing the rules, and the industry adapts to cope with those changes to the rules. PRESENTER: Well picking up on that then, does this mean that if you are an existing investor in a VCT that VCT will just make some gradual tweaks to its portfolio over time, or existing investments can carry on doing what they want, it’s just new investments that are affected? PAUL LATHAM: So it’s new investments being made by the VCT have to abide by the new rules. For many VCTs that’s no change. For some VCTs they may have to evolve their mandate to cope with the slightly changed rules that our other two guests have referred to. PRESENTER: Well Roger, I mean we’re talking there about changes coming in October. The budget was in July, is there much still up for grabs? There’s often a lot of devil in the detail. ROGER BLEARS: I think the starting point is to bear in mind that these venture capital schemes have been incredibly successful for the UK. Something like 22,000 companies have raised over £17½bn. So it’s very much a part of UK policy that the schemes continue. The imperative at the moment is that they obtained state aid, and so the changes which have been introduced in July are designed to achieve that, and it’s expected in late September. PAUL LATHAM: Mark, perhaps it’s worthwhile to make the point that state aid is related to the EU. And so while our own government makes its own rules, it has to comply with a whole series of rules that come out of Brussels. And it’s those state aid rules that Roger’s referring to that have come out of Brussels that we as one of the members have to comply with. PRESENTER: So this is alignment within the EU rather than somewhere else. PAUL LATHAM: Absolutely right. PRESENTER: Well thank you for that, and I just want to pick up on that then Andrew, does this mean that the changes are not, there’s change but it’s not particularly radical? If you are an investor in EIS or VCT you don’t have to panic, but what should you be doing? ANDREW SHERLOCK: Well I think the VCT angle has been covered off, and will be covered off elsewhere, but from an EIS perspective I think the impact is relatively limited. I mean clearly we talked about the age, the amount and the type of investment that you can make. I think at the margin it probably makes funding bigger companies a bit more difficult, and therefore one might see the EIS investments going slightly marginally earlier stage. But other than that I think that they’re a sensible interpretation of the rules and following them should mean fairly limited affect. You know, much of the change in rules is targeting MBO strategies, management buyout strategies, which is not a particularly popular strategy for EIS. It’s much more a VCT, much more in the VCT domain. So I think the impact on EIS will be relatively limited. PRESENTER: Roger, your firm I think gives advice to companies both in VCT and EIS. Have you got a sense of how much of the market overall VCT and EIS is affected by this? ROGER BLEARS: We were discussing this earlier. Approximately we think perhaps 30% that might be affected. I think the point to accept is that EIS and VCT money for some time has had to be invested purely for development and growth, and these rules really support that and affirm it up. The intention is still that other monies can be used to buy businesses. This is just a clearly distinction being drawn between other monies and EIS and VCT monies. So the mandates will evolve as Paul has said, but that’s the principal change. ANDREW SHERLOCK: I think picking up on one of Paul’s earlier points that the VCT industry, which is not one I’m particularly involved with, but I did hear somebody in the VCT industry saying we’ve been going 20 years and for 15 of those years there’s been radical change each year. And each year we’ve got through it and we’ve adapted and we’ve evolved. And therefore I think this is probably no exception to that. PAUL LATHAM: I would agree. It’s part of living with the VCT legislation, it is going to change almost every year, and that’s the job of the professional managers and VCTs to work out how the new rules impact what you have been doing or intending to do, and how do you moderate if you need to moving forward. The impact of EU state aid rules on EIS and VCTs PRESENTER: Well you mentioned a little bit earlier there Paul, about EU state aid. Can you just talk through, because whenever anyone hears anything from Europe people get terribly panicked about it! But just for those that don’t know what exactly is it, why is it important, why can’t we do what we want with our own tax? PAUL LATHAM: So there’s a sensible principle set at Europe, and indeed our government would have set it if it didn’t exist in Europe, that if you’re going to subsidise in some way a particular sector or particular industry, that you shouldn’t create an unlevel playing field between one member state in Europe and another. So it would be wrong for our government to for example support the UK car building industry, and therefore Peugeot and Fiat go out of business. So that’s the state aid principle. And what the EU does is looks at everything that a member state does within its own tax regimes, for example, to make sure that that distortion is not happening. And there is an admitted significant amount of support through VCTs and EIS, there’s the tax breaks that are given to individual investors that invest in VCTs and EIS. So that tax break costs the government, it’s a support that the government has chosen to give. And the EU is looking over the government’s shoulder making sure that that’s an appropriate use of state funds. And they look at that and say well if it’s to stimulate the economy, if it’s to stimulate growth, if it’s to invest in small medium sized companies to help them build a bigger economy in the UK and in Europe, because actually VCTs and EISs can invest in the rest of Europe rather than just the UK, then they’ll say it’s OK. But they’re always looking at the detail of the rules, and what they’ve done is to look at the details and say if we’re going to approve this then UK, you need to change this piece and that piece. And so the introduction of an age of a company, so it’s intended that the money is going to earlier stage companies, younger companies, rather than companies that have been around for 20 or 30 years. You may or may not agree with that as a sensible principle for encouraging the economic growth, but it’s a reasonable proxy for let’s stimulate the economy. And limit the support to those companies that are younger. PRESENTER: And so this isn’t the first time that a periodic tweak has come out from Europe, if I can put it like that. It’s nothing, because I suppose if people haven’t heard of it they might be a bit worried that the EU is trying to clamp down on our… PAUL LATHAM: No, in fact every year the changes that we make in the UK to VCT and EIS legislation has to then be sanctioned by the EU. So the government will come out with its Finance Act, and say this is the rule in the UK, subject to state aid approval. And so that’s happened every year for the last 20-odd years for VCT and EIS. ROGER BLEARS: So the current challenge is for the Finance Bill to ensure that our rules are compliant with EU risk finance guidelines. And this is a challenge because when the EU corals agreements between 28 different members states, it almost always has to write the new rules in very general often ambiguous ways. And it’s for nation states then to interpret that, and write the law in a way which is clear and certain. And that’s what this exercise is about at the moment. The UK Government’s attitude to EIS and VCTs ANDREW SHERLOCK: It’s quite interesting, I mean I think EIS and I’m sure VCT too has been, the UK version has been trumpeted as a poster child for this kind of, for trying to stimulate the economy and get things going. And so there’s been a lot of work which the EIS Association have been doing with other sovereign governments in Europe in order to try and promote it. And as I think you both alluded to earlier on, the government has actively been supporting and developing EIS and VCTs, particularly my own experience EISs. The tax relief’s gone up, the amount of money you can invest in a company, the types of companies and so on. So it’s really been, been a real supporter of it. And I think one of the risks of EU, the EU stamp is that sometimes unfortunately it’s the lowest common denominator that gets the stamp. Having said that there is an argument that now that we have a UK government that’s backing this kind of investment, and EU approval, that actually arguably it’s a more secure system going forward, and therefore I think arguably slightly de-risked. PRESENTER: Well I mean in a sense a cynic watching this would say well they would all stress continuity and it’s just a slight tweaking, and it’s always nice to be able to blame it on Europe. But Roger, to what extent is this being driven by the fact that perhaps even the Chancellor thinks people have playing not hard and fast with the rules but a little bit close to the edges, and actually we need to move this back to what EIS and VCT were meant to be in the first place. ROGER BLEARS: I don’t think that is the case. We begin with Europe, which sometimes takes a rather academic approach to what sort of risk justifies state intervention. And the rule that an investment must be made within the first seven years of a company’s first commercial sale is an arbitrary decision arrived at by what means I’ve no idea, but I think we’d all agree that seven years is rather arbitrary. Now the UK government has done rather well to negotiate carve outs from this rule, so that it is possible to make follow on investments after that seven year period has expired. It is also possible to make what I call breakout investments, where an older company is able to attract investment because the amount being invested will exceed 50% of its average turnover over the last five years, because it’s doing something new and exciting. So it’s always this interplay between perhaps the academic European approach to how we might define risk and the rather more pragmatic approach being taken by the British government. ANDREW SHERLOCK: Can I just pick up there? I mean in terms of the question; do the government think that people have being playing fast and loose with these tax benefits - absolutely not! I mean the whole process of EIS or VCT or whatever is that you get, or particularly the EIS, you get advanced assurance from the revenue before you even invest. So at that point they are in total control of how much money flows into any particular subsector. And what these investments have been able to do is the government can channel money into areas where they would like investment to go, where otherwise it probably wouldn’t go without the tax benefit. So that’s small growth companies, trying to get those kick started, kick starting the economy. And also in renewable energy where it was way behind in terms of the adoption in the UK. It used EIS and VCT to an extent to get everybody geed up to get solar higher on the agenda for people to see more solar, more renewable energy. And then once it’s achieved its task it then withdraws those reliefs and moves onto something else that needs doing. So I don’t think, I think it’s just a natural cycle of thinking, and the government using these things very sensibly. PRESENTER: Paul, in the long term, one of the things that came out of the Finance Bill was a green paper on pensions. One of the things which the Chancellor is saying quite up front is we’re giving an awful lot away to quite well off people in tax breaks, in tax relief up front, can we keep going with this system? There’s some quite big figures in that though. Are you worried that he might turn his attention, or is beginning to turn his attention to EIS and VCT? PAUL LATHAM: No, I’m not, because they’ve been around for two decades both of them. They’ve been supported by governments of every colour over those years. PRESENTER: But so have pensions. PAUL LATHAM: Well I think there’s a difference between what you think the purpose of the pension is versus the purpose of EIS. So the pension is there to encourage people to save for their later life. And a reasonable position might be if you’re already very rich you don’t need to save for your later life. ROGER BLEARS: And by and large pension funds are investing in quoted securities. PAUL LATHAM: Exactly. ROGER BLEARS: Whereas the function of the VCT and EIS is to invest in small to medium sized companies. I think most of the government owned funds that I know don’t make the best fist of this if they try and make investment decisions in SMEs on their own. Far better to let independent funds, which have raised monies from high net worth investors in the market, take these difficult investment decisions, and high net worth investors will decide which are the good managers, which are the bad, and the market decides which SMEs are supported, and only the best are supported. So one can’t do away with this sort of relief if one wants a vibrant economy with growing SMEs, it’s essential to it. PAUL LATHAM: And the kick back of course is that those growing SMEs are employing people, good for the economy, but also paying tax, paying corporation tax, the individuals are paying income tax. The money they’re spending is being paid partly into VAT. So there is a payback, and there’s been some analysis done on the benefits to the exchequer of investing in VCT and EIS, and there’s a payback. It makes sense over the medium term to encourage that investment and get the payback in terms of other tax takes. PRESENTER: So a useful tool of economic policy. ANDREW SHERLOCK: Absolutely, I was going to say exactly the same thing. In terms of it’s just enlightened self-interest really. If you give a pound away in tax relief you probably get it back within 18 months plus all the ongoing. There is analysis. ROGER BLEARS: We shouldn’t forget 20 years ago when Tony Blair was keen that polytechnics should convert to universities, the BES which was the forerunner of EIS, was used to finance the construction of student accommodation for a period of some years. So these reliefs are tools of the government which they use, and, as Andrew said, their usage changes as often as the politics do. The changing risk/reward characteristics of VCTs PRESENTER: Well let’s move on to the practical implications then on how it’s going to affect investments. Now a little earlier Andrew, you were saying you think it might push particularly EIS into smaller earlier stage companies. Does that change the risk reward profile of EIS as an investment? ANDREW SHERLOCK: Well I think I did say that, and I think it will. The limit on the amount that you can invest, or that a company can receive from state aid sources, of which EIS and VCTs are two, is capped. And it’s capped at a lower level than previously guided and previously anticipated. So I think there is a natural move for things to be slightly earlier stage. The rationale being that if you are invested in a company, you know, you want to be able to follow on investors, as Roger was saying, which is possible and encouraged, to follow on to try and help those companies reach some degree of maturity and some degree of success. The point at which you can fund them to under state aid rules is slightly earlier than perhaps you were before. And therefore there will be a natural shift. Not a huge one but at the margin I would have thought at a slightly earlier stage. It doesn’t, and the risk profile of the individual investment may go up slightly, but equally the time in which you’re likely to exit is likely to shrink or be reduced. And there are also other ways of diversifying risk, not just by portfolio diversification and so on. So it might be that instead of investing in 10 companies the portfolio might invest in 12. So at the margin there are changes, but it’s by far from radical I would argue. PRESENTER: But one of the things that’s in I think is this, I mean this focus on knowledge based companies for example. They’re now saying you can invest in fund companies with a maximum of just under 500 staff rather than 250. So I guess this is going two ways. ROGER BLEARS: We were talking about this earlier and asking whether this begs some redundancies at GlaxoSmithKline, massive restructuring there, but… PRESENTER: I know it’s a valuable tax break but I don’t know. ROGER BLEARS: Indeed, so we’re not quite sure what change that is going to be leveraged, because between us we were struggling to come up with knowledge based intensive companies with 500 employees. PAUL LATHAM: That wouldn’t already have breached one of the other limits of size. PRESENTER: Well again knowledge based, you were saying previously Roger, in Europe you have these broad definitions, everyone has to work out legally what it means for their own company. What do they mean by knowledge based, is there a proper definition of that? ROGER BLEARS: There is an almost irresistible desire to define risk if you’re going to grant state aid. And risk is very easily defined if one is focusing on knowledge intensive companies, which may be university spinouts. It’s not so easy to define otherwise. Every few years or so we have a debate with the government and the EU as to how we might define risk, and we always end up with accepting you can’t do it other than by listing out a set of prescribed trades which companies can’t pursue. That list hasn’t changed this time around. PRESENTER: And we’ve talked a little bit about perhaps this focus put on slightly smaller companies, but are there any changes that limit the amount of money you can put into VCT and EIS as an investing vehicle? PAUL LATHAM: No, so from an investor standpoint this doesn’t change anything for EIS or VCT, the limits are still the same and still very generous. VCTs and MBOs PRESENTER: One thing that Andrew alluded to earlier, and he said it, I think he said it’s probably more likely to affect VCTs, so pass the book back to you, was about management buyouts. Can you just talk us through what the changes are there, and how they can potentially? ANDREW SHERLOCK: So put simply there has been an intent for a few years now at EU to ensure that we don’t support replacement capital. So if a company already exists, it’s worth £5m, it’s got five shareholders each with £1m, so maybe the five founders. What they don’t want is VCT or EIS to come in, put £2m into that company just for that £2m to disappear because two of the founders have retired and taken away that cash. So that’s the replacement capital concept, and a management buyout would be one of those. And so they’re making sure that the money is directed not to those very simply structured in the way I’ve just explained, but usually much more complicated management buyout or replacement capital structures. Because it’s not stimulating the economy directly, it’s not new capital that’s going to be used to buy new equipment or employ more people. It’s just someone walking away with their share of their original investment. And so that’s where the rules have changed to tighten up. It’s been in place since 2012, they’ve just tightened up the rules around the use of EIS or VCT money for replacement capital. PRESENTER: And is there any change in rules that would affect whether an existing investment in a VCT or EIS is then able to go and purchase another company altogether? ANDREW SHERLOCK: Yes, so there’s a similar argument there. If that £5m company already exists, is already operating, just creating another company putting your £5m of EIS money into that, or VCT money. And then going off and acquiring an existing company worth £5m, you’ve not stimulated the economy, you’ve just changed shareholding. The previous shareholders are now the VCT or EIS investors. So it’s about making sure that we’re generating new growth by new capital being injected, so acquisitions and MBOs are two of the things. But they’ve tightened up the rules that have been in since 2012. PRESENTER: Roger, do you want to come in? ROGER BLEARS: Well I was just going to say I think that reflects muddled thinking within Europe on this. If the rules are designed to ensure that there is only state aid where there’s a need, and illegal state aid is where one is giving a company an unfair advantage over its European competitors, then money used in an MBO which is paid out of the company and doesn’t go to growth and development by definition can’t be state aid. Because it’s not creating an advantage over European competitors, it’s merely facilitating a change in management. So at the moment we have to grapple with this muddled thinking, and the imperative is to obtain, for the UK government to obtain state aid by late September. But they have indicated that the next legislative round the subject of replacement capital will be discussed further with the industry, because it does make sense. PRESENTER: So that’s one lobbying point still to go for. ROGER BLEARS: Indeed. Protecting portfolios against loss of tax reliefs PRESENTER: If you are in an investment that for whatever reason Andrew, falls, say falls foul of these rules, what happens in the EIS space? ANDREW SHERLOCK: Well in the EIS space you would lose your reliefs. So you lose. PRESENTER: But just on that one company. ANDREW SHERLOCK: On that one company. PRESENTER: Right. ANDREW SHERLOCK: So you’d have to pay back the income tax relief and the capital gains tax rollover, and any gains or so on would be subject to normal capital gains tax. So they’d all disappear. But that would be just for that one investment yes. PRESENTER: And you were mentioning earlier almost this degree of pre-approval that you get on EIS investments. So how likely is it that the revenue having looked at something and said that’s all right, then looked at it again and said that’s not all right? ANDREW SHERLOCK: I would say it’s pretty unlikely. As long as you do what you say you’re going to do, and you stick to it. I think the only thing that might be the case going forward is that, and Roger may have a view on this, is that advanced assurance applications are likely to have to be a bit more descriptive and a bit fuller than perhaps they have been in the past. But that said that should give greater comfort that if you do what you say you’re going to do that it should be watertight. ROGER BLEARS: I think it’s always been the case that if a company is properly advised and makes advanced assurance applications on a full disclosure basis, an advanced assurance when given is rock solid. PRESENTER: But is this, sorry. ANDREW SHERLOCK: No that’s OK, as a general point, I mean we touched on it before but anybody who has an existing EIS or VCT, well particularly EIS but to some extent VCT investment, is unaffected by these. There are a number of changes in the budget, some of which are marginally restrictive, but the industry is full of professionals who have been doing this for quite a number of years with experts to help formulate solutions. And I would be extremely surprised if any provider would go out without a watertight offer going forward that is compliant with all of these rules. And at the margin there may be slight tweaks to different strategies or different, but overall I don’t see it as a radical departure from the previous norm. PRESENTER: Just to ask you the same question Paul, if you’ve got an investment in a VCT that falls foul of these tweaks to the rules, what happens? Does that investment now count as the non-qualifying part of your VCT? PAUL LATHAM: No, that’s not how it works under the new rules. So if it turns out that a VCT invested money in a company that had its first sales 20 years ago that would be a breach of the rules, and the VCT would lose its status, and in the same way as EIS people would have their income tax reclaimed. What’s important… PRESENTER: So it would affect the entire? PAUL LATHAM: Yes, everyone who is invested in that VCT would have the same impact. The point to make is that no VCT has ever lost status in 20-odd years, and so it is the role of the professional manager of VCTs, and VCTs are PLCs with professional managers and independent boards of directors, to look at what is going on, what the investments are. But the same process applies as applies to EIS that you just heard about from Andrew of advanced assurance. So before we made an investment from a VCT we’ll go to the HMRC and say this is the company, this is what we’re going to do, this is how it’s going to work, this is how the money is going to be deployed. And so while not a legal requirement for them to stick to their decision, the handbook, the HMRC handbook they operate against says that if you’ve given assurance and the company has done what it said it would do then you have to honour that assurance. PRESENTER: So you have quite a long paper trail if they do query. ROGER BLEARS: I was just going to say, whilst it’s true there are some technical rules which define what is your first commercial sale. I think most people recognise that SMEs tend not to keep records going back 20 years. And both David Gork MP, the Financial Secretary to the Treasury, and HMRC only yesterday have stressed that they intend to take a pragmatic approach to the keeping of records and disclosures around when trading may have commenced. So whilst in theory the legislation looked at coldly, in these new rules could be interpreted in a way which suggests alarm. A pragmatic approach will be taken. PRESENTER: You don’t worry this puts an awful lot of discretionary power in the hands of HMRC? ROGER BLEARS: They don’t have the records either. Or to the extent that they do they’re not electronic. So if we don’t discover when making an investment that a company might have started trading 10 years ago because it’s not apparent from its records, HMRC are no more better able to discover the reverse, so I think it’s not likely to happen. Due diligence costs ANDREW SHERLOCK: I have to say from our own point of view we’re looking, these things are higher up the priority list. And I’m sure it’s the same elsewhere. But how much state aid has been, has the company had, when was its first commercial sale and various other of those points are all very high on the agenda in terms of when we’re looking at new investments, and also monitoring them going forward. ROGER BLEARS: So due diligence costs initial and ongoing will increase. PRESENTER: Well that brings me onto the next point, I mean if due diligence costs are likely to go up a little bit Andrew, are they ones that you can soak up in the existing costs of EIS or do you think those are likely to go up to investors? ANDREW SHERLOCK: I think it’s probably soakable up within the existing fee structure. But I mean I don’t think, I think there is, it’s an incremental at the margin. I think some of the monitoring, ongoing monitoring, particularly with VCTs I would have thought would be enhanced. But I think it’s all within the bounds of reasonableness. PAUL LATHAM: The list of rules that we have to make sure we comply with is enormous. There’s another couple that have been added. The processes that you have within a VCT house to look after all of those rules are significant. We’ve got lots of people monitoring what’s going on, and the due diligence is extensive. PRESENTER: We’ve talked a lot around the changes to VCT and EIS, but very quickly are there any other key changes that have been made in the budget that investors have to keep an eye out for? I’ll come to you first on EIS. ANDREW SHERLOCK: On EIS I don’t think, I think we’ve covered most of them. I think clearly it’s the age of the company, the amount that you’re allowed to invest and the type of company that you can invest in. The key thing is to use somebody, a provider who gets advanced assurance ahead of any investment, because that gives you some buffer and some degree of comfort in your investment that it won’t be retrospectively overturned. PAUL LATHAM: I think that’s an important point, because EIS investments a lot are managed by professional managers like Oxford and Octopus, but there’s an awful lot of EIS investments that are done by small businesses just raising a few hundred thousand from friends and family. And I think that that’s a more difficult area to be comfortable in. So I would say this wouldn’t I, but going to a professional manager to buy your EISs I think is an even more important step than it was before the budget. PRESENTER: Well that’s EIS, but from the perspective of VCTs anything else in the budget investors need to? PAUL LATHAM: No, I think we’ve covered all of the things that were introduced in the budget and explored them yes. PRESENTER: And a final thought from you Roger Blears, overall are these changes good for the industry, bad or no difference whatsoever? ROGER BLEARS: I think we need to bear in mind that the venture capital schemes have been very successful for the UK. Venture capital has not in the past been so important for Europe. So not a word, a final word on the budget but if I may mention the green paper which the European Commission published in February sponsored by our own Lord Hill who’s the Financial Services Commissioner, which will facilitate the promotion of venture capital funds throughout Europe. So if we can export the UK success story through Europe using the new as they’re called UVFP, European Venture Capital Fund Passports, then that’s something to be proud of. PRESENTER: We have to leave it there. Roger Blears, Paul Latham, Andrew Sherlock, thank you very much. ALL: Thank you.