AIM FDs pan tax regime as IFRS snags continue

AIM FDs pan the lack of tax breaks available on the junior exchange;
advantages they say could kick-start much-needed investment in the capital

The finance chiefs also flagged up the headaches IFRS had caused their
companies. Of those polled in new research, 70% felt the government could be
doing more to kick-start liquidity by reintroducing more significant tax breaks
for those investing in Aim companies.

FDs, CEOs and senior decision makers from 123 different UK-based Aim-listed
companies took part in the survey.

For the last three years, some fledgling companies have been denied breaks
granted under the Enterprise Investment Schemes and Venture Capital Trusts

Before 6 April 2006, investors in companies with gross assets of more than
£16m qualified for these tax breaks. But after this date the government slashed
the upper limit to £8m.

To compound the problems, the number of staff a company could employ was
capped at 50 for EIS and VCT investments a year later.

The Quoted Companies Alliance also made a strong case for raising the VCT and
EIS gross asset and staff number limits, Smith & Williamson added.

Smith & Williamson, authors of the research, reported there were 938
UK-based Aim companies on the market at the end of December 2008. The junior
exchange must now publish IFRS-compliant numbers, but 49% of those polled said
the introduction of International Financial Reporting Standards had been

Smaller companies appeared to be the most adversely affected, the firm said.
65% of this group reported that the application of IFRS had given them problems.

As the snags continued for UK companies, efforts to introduce IFRS in the US
appear to have stalled under the Obama administration as US issuers have given
the plans a lukewarm reception.

Last week, Financial Reporting Council chief Paul Boyle came out in support
of the standards and urged the SEC to let domestic companies use it for
financial reporting in place of US GAAP.

Such a move would be an extension of the SEC’s current policy which enables
non-US companies listed in the US to use IFRS.

‘A decision by the SEC to permit US companies to use IFRS would enhance the
global acceptance of IFRS as a set of high quality accounting standards,’ said

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