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AnApparition Limited EIS

Description: The market for ancillary items that originate from the production of films is a lucrative and often untapped one. Film posters, photo stills, and now even items such as wireless cell phone applications (“Apps”) are used in the marketing of a film, but once the film is midway through or concluding the run of the film these products are too easily ignored. The truth of the matter is that these products can bring in considerable revenues all on their own. AnApparition Limited is raising finance to acquire and develop the licensing, online, mobile application, music, memorabilia and innovation rights for motion picture films in such a way so as to enable investors to qualify for tax benefits under the EIS and it is intended that the Company will operate a qualifying trade under the rules of the EIS, for which advance assurance has been confirmed with HMRC.

The Opportunity covers:

Licencing
Online
Music
Memorabilia
Mobile Apps.
Innovation

Income tax relief

Provided an EIS qualifying investment is held for no less than three years from the date of issue, or until three years from the commencement of trade, if later, an individual with no more than a 30% interest in the Company can reduce their income tax liability by an amount equal to 20% of the amount invested 2010/11 (proposed 30% for 2011/12). The minimum subscription is £500 per company and the maximum in respect of which a subscriber may obtain income tax relief in any year is £500,000. Individuals may elect to treat their subscription for EIS shares, up to their maximum annual allowance, as if made in the previous tax year, thereby carrying back the income tax relief by one year.

CGT exemption

No Capital Gains Tax is payable on the disposal of shares after three years, or three years after the commencement of trade, if later, provided the EIS initial income tax relief was given and not withdrawn on those shares.

Loss relief

If EIS shares are disposed of at any time at a loss (after taking into account income tax relief), such loss can be set against the investor’s capital gains or his/ her income in the year of disposal or the previous year. For gains offset against income tax, the net effect is to limit the investment exposure to 42p in the £1 for a 40% tax payer or up to 35p in the £1 for a 50% tax payer (2011/2012), if the shares become totally worthless. Alternatively the losses can be offset against Capital Gains Tax at the prevailing rate – 28% for tax years 2010/11.

CGT Deferral Relief

Tax on gains realized on a different asset can be deferred, where disposal of that asset was less than 36 months before the EIS investment or less than 12 months after it. Deferral relief is unlimited, in other words, this relief is not limited to investments of £500,000 per annum and can also be claimed by investors (individuals or trustees) whose interest in the company exceeds 30%. This can be done on a sequential or serial basis.

Inheritance Tax Exemption

EIS investments are generally exempt from Inheritance Tax after two years of holding such an investment. EIS is appropriate for those investors who wish to include in their portfolio some high risk companies.

Please read – changes as a result of Budget Statement of 23 March 2011

A number of changes to existing venture capital tax reliefs have been announced in the Budget Statement of 23 March 2011. As such from 6 April 2011, the rate of income tax relief for a qualifying investment under EIS will be 30%, an increase from the rate currently listed of 20%. The change in income tax relief depends upon the date on which the fund closes, previously the fund had intended to close on the 31 March 2011, the date at which the fund closes has now been extended to 30 June 2011 to ensure that the relief is available at the enhanced rate of 30%. If a claim for EIS income tax relief is elected to be carried back to 2010/11, the rate of relief will be at the lower rate of 20% not 30%. Investors will therefore need to consider carefully whether a carry back claim should be made.

For more information or to obtain an Information Memorandum, Brochure and Application Form please call free (UK only) 0800 2985411 or email info@fdg-aip.co.uk