At a meeting between CCAB-I Tax Committee representatives, which included Chartered Accountants Ireland, and officials at the Department of Finance in October to discuss CCAB-I's Pre-Budget 2013 submission, CCAB-I highlighted a number of concerns with the EII scheme. The key concern is that the EII scheme is unattractive to potential investors as the bulk of the relief is subject to the High Earners Restriction. To support our concerns, an informal survey of a selection of member firms from locations around the country was undertaken. The feedback received, and views on the operation of the scheme in the first year, were included in a CCAB-I submission to the Department of Finance last month.

The leading feedback from the member firms polled includes:

• The number of companies receiving investments under the EII scheme is unlikely to increase substantially. In June of this year, €238 million was invested under the EII scheme, involving 11 companies.
• The number of potential EII scheme projects numbered in single digits.
• The High Earners Restriction is a key factor in determining the number of potential investors.
• The three year investment period is too short for companies to secure the funds, put the investment to work, adjust the business model and generate a sufficient return.

Other key points made in the submission were:

• The amount of tax relief available to investors under the EII scheme is risky as it is not evident whether the final 11% of the investment will be available
• Linked to the risk is the timing of the tax relief. Only 30% of the relief is available upfront with the 11% balance contingent on increasing employment numbers and maintaining average remuneration and/or increasing expenditure on R&D.
• The administration overheads to satisfy the requirements for the additional 11% relief is disproportionate in relation to the investments been made.

The CCAB-I submission is published on here.