ADVERTORIAL: EIS & SEIS Investing with Blackfinch

With anaerobic digestion and hydropower generation projects not being eligible for EIS tax reliefs from 5th April 2015, investors will now be looking for new ways to invest through EIS with a focus on real and reliable revenue streams. It is more important than ever that investee companies strike the correct balance between providing investors with the chance to create real returns from strong opportunities, as well as managing some of the risk through strength of counterparty and business model.

As well as IHT Portfolios, which focus on delivering Business Relief through capital preservation focused trades, Blackfinch also offer portfolio services for investors seeking Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) qualifying opportunities. Our strong management team and asset advisers are experienced and also carry the expertise necessary to source, develop and manage these investments.

Blackfinch EIS Portfolios provide these characteristics for investors, to help fill the gap left by renewable energy generation within EIS. Our EIS portfolios are a discretionary service, meaning that we select the investee companies on behalf of the investor, according to our investment mandate. First and foremost, we will only invest into companies which have been granted Advance Assurance from HMRC, providing comfort to the investor that they qualify for the valuable EIS tax reliefs. The nature of the investee company activities also provide strategic focus on capital preservation through their predictable income streams underpinned by intellectual property or high levels of contracted revenue.

The underlying investee companies in our EIS portfolios are concentrated in the media sector, allowing investors to access real growth opportunities on their investments. The entertainment and media sectors are an established and important part of the UK economy, accounting for approximately 4% of GDP. Blackfinch focus on two distinct areas within this sector, music publishing and television distribution.

Our music publishing companies are responsible for creating, protecting and monetising rights in musical compositions on behalf of musicians, songwriters and composers. Music publishing royalties are the revenues due to the creator of that underlying intellectual property and are generated from a number of sources, including performance, synchronization and mechanical royalties. The intellectual property and strength of revenues contribute to the capital preservation characteristics, while the strength of counterparties we work with means that there is real potential for growth.

Our television distribution companies sell the broadcast rights for the television programmes on behalf of producers. The companies acquire the distribution rights for those television programmes by advancing money to the television producer which is recovered in the first position, along with sales commission and expenses, from the sales of the programme to international broadcasters who license those rights. Usually, the majority of revenues will come from one reputable primary broadcaster, such as the BBC, and are for a known amount which is contracted in advance. These contracted revenues offer an element of capital protection to investors and the remainder of revenues are from sales to credit-worthy international broadcasters.

Tax reliefs available for EIS qualifying investments include 30% upfront income tax relief, 100% capital gains tax deferral, offset of capital losses, tax free growth and 100% inheritance tax relief after two years. Investors are able to invest up to £1,000,000 per tax year and can also carry back investment into the preceding tax year.

Blackfinch also provide SEIS Portfolios, a discretionary portfolio service which selects SEIS qualifying underlying investee companies on behalf of clients. Again, the underlying investment strategy is within the entertainment and media sector and all investee companies will have been granted Advance Assurance from HMRC, but with SEIS the tax reliefs are more generous. SEIS legislation was originally introduced by the UK government in 2012 and has since been made a permanent fixture due to its success.

Blackfinch SEIS Portfolios access investee companies which fund new independent music, which also carry the benefit of being distributed by a major label e.g. SONY, Universal etc. Each underlying investee company will produce recorded material by a variety of established and exciting new artists and benefit from the revenues created through the sales of that material, which will be distributed by a major label. The investee companies also own the intellectual property.

Tax reliefs available for SEIS qualifying investments include 50% upfront income tax relief, up to 50% capital gains tax relief (relief rather than deferral), offset of capital losses, tax-free growth and 100% inheritance tax relief after two years. Investors are able to invest up to £100,000 per tax year and are able to carry back investment into the preceding tax year.

Blackfinch is an established provider of tax efficient and capital protected investments, with a clear focus on capital preservation, transparency and security. With over 20 years experience and expertise in the UK market, and approximately £500m under management and administration within our group, we focus on delivering strong investment opportunities to our clients which also benefit from favourable tax reliefs.

We understand that this is an important time for advisers and investors to source investment opportunities which carry the balance of growth opportunity, capital preservation and qualification for the valuable tax reliefs. At Blackfinch we believe that we have struck this balance with our EIS and SEIS Portfolios and that we provide strength and expertise through our management teams and counterparties.

Biography

Richard is a founding partner of Blackfinch and has been CEO since 2009. Previously Richard held UK taxation positions at Bank of New York and Merrill Lynch. Richard’s main focus at Blackfinch has been the development and management of tax efficient trading companies with a focus on capital protection, as well as developing Blackfinch’s relationships and investor solutions within the UK intermediary space.