As preparations for Budget 2022 get underway and the Department of Finance reviews the Employment Investment Incentive Scheme (EIIS), our latest episode of Tax Talk examines the operation of the Scheme and how it might be made more effective in providing early-stage and small businesses with the funding they need to grow their business or to restructure and invest in their recovery.
Our host, Samantha McCaughren, was joined by Nick Corcoran, co-founder of Cardinal Capital, Brendan Sheppard, CEO of Smart Factory Solutions; and Institute Council member Laura Lynch, whose practice, Laura Lynch & Associates, provides strategic advice to start ups and SMEs seeking to raise funds through the EIIS.
Brendan Sheppard, whose business raised finance through the scheme, said the experience was painful and protracted, taking three years to complete. “At times, it felt like the process was designed to wear you out in the hope that you would give up and go away.” He contrasted it with his interaction with Enterprise Ireland which provided significant support, including funding to his business as a High Potential Start-up.
Nick Corcoran said while the EIIS was a good scheme, it needed to be broadened to include structured schemes that would allow smaller investors to invest in SMEs. He also said placing the scheme under the aegis of Enterprise Ireland with Revenue as the approver would be a far more efficient model. “Enterprise Ireland has the distribution process and the experience curve of processing entrepreneurial incentives. Revenue is not set up to determine the classification of individual applications.”
Laura Lynch said although the Scheme had been improved since 2019, self-certification had increased the burden of risk for SMEs who have to pay for professional advice to help them navigate its complexities. She also said the Scheme needed to recognise commercial realities. “The EIIS should come into the current century and abandon the restrictions on holding company structures and certain connected party rules that just don’t recognise how SMEs do business in today’s economy.”
All agreed that with some changes, the Employment Investment Incentive Scheme could be reformed to fulfil its intended purpose of fostering an entrepreneurial economy.