HMRC have, finally, come to a decision on our EIS eligibility. Regrettably, they have decided that EIS no longer applies to Community Benefit Societies like B4RN and therefore are withdrawing our eligibility for that tax relief. That means that all shares that have been waiting on EIS certificates will not receive them and the 30% EIS tax relief will not apply. But investors will now receive interest from day 1 backdated to when the investment was received. The current interest rate is 5%, but this may change from year to year depending on how well B4RN is doing, which is the same as for all our shares. We hope that the community will continue to support us and buy shares in B4RN so as to allow us to build out to more areas and connect more rural properties desperately in need of high-quality broadband. Whilst it’s a disappointment that the 30% tax relief no longer applies, the current 5% per annum interest paid on our shares is still an attractive return given current interest rates.
Barry Forde, MBE
Chief Executive Officer
Broadband for the Rural North Ltd
26th January 2019
Broadband for the Rural North Ltd was authorised by HMRC to issue Enterprise Investment Scheme (EIS) compliance certificates on the 2nd December 2011 making investment in B4RN withdrawable shares eligible for tax relief under the Enterprise Investment Scheme.
On the 14th October 2018 HMRC announced they would be testing our compliance with a new ‘risk to capital’ rule brought in as part of the Finance Act 2018. This rule came in to force on the 15th March 2018.
The rule states that for investors there must be a significant risk to capital greater than the net investment return. This test was introduced to avoid abuse of EIS by schemes that were structured to obtain tax relief but pose no real risk to investors.
B4RN made a prompt and detailed response to HMRC’s enquiries.