A report produced by the London Business School for the British Venture Capitalists Association said current legislation for calculating tax liabilities from capital gains is a ‘major barrier’ to more investment in venture capital and private equity.
Insurers investing in so-called ‘funds of funds’ can face making tax calculations for up to 400 different companies in which they have invested.
Dr Oliver Burgel, research fellow at the London Business School, said: ‘For those investors which are liable to taxation on capital gains, the costs of administering investments in private equity limited partnerships are substantially higher than those investing in other alternative asset classes.
‘If the government wants to increase institutional investments in unquoted companies, a simplification of the fiscal regime would be an obvious area of reform.’
Chairman of the BVCA Edmund Truell, said: ‘We urge the government to read the reports and do something about the fiscal and regulatory barriers facing these institutions when they consider private equity investment.’
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