We don't expect advisers to undertake due diligence on underlying investee companies (that is our job) but we believe advisers should be able to articulate to investors more than just the potential tax reliefs available under EIS.
We are increasingly hearing from advisers that clients appreciate the reassurance that comes with knowing where there money is going.
Very early stage investments, via the Seed Enterprise Investment Scheme, are slightly different as it is much more difficult to state what investors will be invested in due to limited capacity that can be deployed per company.
Therefore I'd suggest that it is important to understand the types of companies within a portfolio and the provenance of investment deals. As an example, my team works closely with the likes of NHS trusts, academia and technology campuses to source the best SEIS opportunities.
This is what advisers understand about our SEIS offerings rather than specific companies.
Regular deployment
By their very nature, Seed Enterprise Investment Scheme investments are different to EIS as with SEIS it is expected that portfolios will be funded in tranches.
As the companies are very young, or only just established, and can only receive a maximum of £150,000 via SEIS, then it is not easy to regularly deploy SEIS funds into companies.
However, when considering EIS portfolios, it can be advantageous to choose a portfolio which regularly deploys in to investee companies.
Regular deployment enables investors to start benefitting from potential tax reliefs at the earliest opportunity and allows investee companies to be regularly funded rather than receiving lump sums, which can on occasion be misused.
Investing via the EIS and SEIS should be considered throughout the year as part of prudent financial planning for appropriate clients.
However, there will always be the end of tax year rush and advisers should consider the questions they ask of providers at this time of year especially.
Andrew Aldridge is head of marketing at Deepbridge Capital
