Start-up Companies: Tax Incentives

Lord Londesborough Excerpts

Monday 29th April 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The Government have actually monitored the benefits of the tax reliefs and indeed published independent reports at the 2023 Autumn Statement into EIS and SEIS. We have also published annual reports into R&D on whether the schemes are appropriately designed. However, the noble Lord raises a really important point. He is right that there has been an enormous amount of error and fraud, so HMRC has taken action and has boosted the number of people working in fraud from 100 to 500 people who are very much focused on those things. It was also the case that much of the fraud or error was happening using nominated bank accounts. HMRC has now closed the ability for companies to use nominated bank accounts, which will have an impact.

[Lord Londesborough (CB)]

My Lords, further to the previous question, I ask the Minister: when will the Government conduct an impact assessment on both the EIS and SEIS investment schemes, specifically on the sustainability of businesses funded through these tax incentives? I ask because start-ups have a failure rate of around 90% and we should be clear about the costs/benefits when some £30 billion—so far—of taxpayers’ money has been involved.

[Baroness Vere of Norbiton (Con)]

As I said in answer to the previous question, an independent report has been published fairly recently on the design of the two schemes. It is the case that start-up companies sometimes fail and we need to make sure that we get the best value for money for the taxpayer. The Treasury is very focused on that.