The Financial Services Compensation Scheme has put an Enterprise Investment Schemes promoter in default.
Ober Private Clients Ltd was placed in default last week (December 22), paving the way for the FSCS to pay out on any eligible claims against it.
It is now yet known how much the FSCS is expecting to pay out or how many claims it is expecting to receive against the company which specialised in promoting and arranging investments in EIS.
A declaration of default means the FSCS is satisfied the firm is unable to meet the eligible claims made against it.
Earlier this year (August 25), the life-boat scheme said it was in the process of assessing whether investors had a valid claim against the firm.
In an update in October, the FSCS said it had moved into the final stages of its investigation into Ober and while it had started assessing some claims, it could not confirm when it would process individual claims.
While promoting EIS, Ober Private Clients also sold a corporate bond in Fusion Festivals & Events and shares in its own company but ceased trading in November 2019.
Investors in EIS qualifying companies can receive a tax break of as much as 50 per cent of the amount invested, with any income and capital gains exempt from tax.
Under the schemes companies can raise up to £5m each year and up to a maximum of £12m in their lifetime.
Changes introduced in the 2017 budget saw then chancellor Philip Hammond tighten the rules around the types of companies that can be invested in through the schemes.
HMRC was concerned that too many EIS investments were made with capital preservation in mind, when the aim of the EIS tax breaks was to incentivise investment into risk assets.
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