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COVID-19 support loan schemes, the Venture Capital Schemes and EU State aid limits

By Philip Hare
13 May 2020

We have sought HMRC’s confirmation on the impact of the various support schemes that have been announced by the Government following the COVID-19 outbreak, on the annual and lifetime EU State aid investment allowances for the Venture Capital Schemes (VCTs, EIS and SEIS).

Coronavirus Business Interruption Loan Scheme (“CBILS”)

The Department for Business, Energy & Industrial Strategy (“BEIS”) notified CBILS to the EU Commission as a State aid under the new Temporary Framework for COVID-19. Therefore it is not de-minimis State aid, unlike its predecessor scheme the Enterprise Finance Guarantee.

Businesses can have received de-minimis aid and still be eligible for support under the new scheme.  This is because the 800,000 Euros per business limit for grants and tax relief aid in the ‘temporary framework’ is separate to normal de-minimis threshold, which allows most businesses to receive up to 200,000 Euros of de-minimis aid over three years (with lower thresholds applying to the agriculture, fisheries, aquaculture and road freight sectors).

Aid provided under the ‘temporary framework’ can also be received alongside aid from fully notified schemes. It can also be received alongside aid administered under the General Block Exemption Regulation (“GBER”).

The exception to this is if a business has received other forms of aid to support specific projects, and receipt of aid under the ‘temporary framework’ toward the same projects would take the business over the aid intensities permitted under the GBER or notified schemes.

Therefore, CBILS does not count toward the annual and lifetime investment limits for the Venture Capital Schemes.

Bounce Back Loan Scheme (“BBLS”)

For State aid purposes, if a company is applying for BBLS then the company must ensure that the business self-declares as not being a “business in difficulty” on 31 December 2019.  If so, then any previous de-minimis State aid does not impact a business’ eligibility for the Scheme. Any aid received under the Retail, Hospitality and Leisure Grant and any Business Interruption Payment received under the Coronavirus Business Interruption Loan Scheme will count towards their total State aid allowance under the Temporary Framework. Businesses are required to self-declare that, since 19 March 2019, they have not received more than £711,200 in State aid under the State Aid Temporary Framework (or £106,680 in the case of fisheries and aquaculture businesses, or £88,900 for agriculture businesses).

If the business self-declares as being a “business in difficulty” on 31 December 2019, then additional de-minimis State aid restrictions apply.

Future Fund

The Future Fund is still in development and therefore HMRC were unable to comment on how this will impact the Venture Capital Schemes at this stage.

As a general point, businesses should remember that the maximum an undertaking can receive from all of the aids under the temporary framework for COVID-19 relief State aids is 800,000 euros or £711,200.

The above is correct at 13 May 2020 and is subject to change. Businesses should take advice before applying for any of the COVID-19 support loan schemes.

Expert, Impartial Advice

Tax relief schemes are a key part of the UK Government's strategy to help small and growing businesses raise much-needed capital. We advise businesses looking to raise money under these schemes and can deal with HMRC on your behalf.