EIS and SEIS criteria need to be more stringent

Both the SEIS and EIS schemes have helped finance the essential growth of the UK's SME sector.

However the schemes were never built to house the rapidly increasing investment via ECF platforms. The platforms and ECF would never have been able to build such a rapid increase in business without them - the tax savings are something all sites major on. Very few pitches on ECF platforms complete without either EIS or SEIS reliefs for the investors.

Where does all this money come from? Simple - its all part of the massive pot we as taxpayers put our money into annually to allow our elected government to spend on services, like the NHS. So rebates will mean that this money will not be in the pot - it is instead in a private individual's hands as part of his choice to invest in a company. Government has essentially handed the power to spend part of the tax pot to anyone willing to back an ECF pitch. These decisions are now being made by mainly unqualified people - bit like having Jonathan Ross as PM.

This works out fine if the net result is an increase in GDP and jobs - the money has been well spent. But what if most if these companies do not grow, some go bust and the rest remain like so many SME's, a vehicle for earning a living for the owners? To what extent could we say that this is a good use of taxpayers money?

Why would Government expect the man in the street to be better at picking a winner in business terms than a business expert - say a banker, VC or entrepreneur? Surely that is completely counter intuitive. Certainly from reading the forums on sites like Crowdcube, the evidence is that most people have no clue what makes a business run well or fail.

In an age when we are very obviously struggling to pay the basic running costs of the NHS, does it make sense to keep throwing money at these 'businesses' when there is evidence that they may not deliver and no evidence after 4 years that they can. Sure we can sit and wait a few more years for the outcome but isnt Government about steering a future course - one that is prudent and doesnt throw away our hard earned money. We can all look backwards.

We are contacted weekly by professionals who agree that this ECF bubble will end badly. It is time to tighten up the criteria used to hand out EIS and SEIS. Our taxes need better protection than to be placed at the whim of the man on the street.

Platforms need to be more accountable, EIS and SEIS criteria more stringent. At the moment we are freewheeling towards the precipice.