Governments of both hues have introduced (and closed down) a variety of schemes to encourage investment in new and small businesses. A key feature of all of these schemes has been tax relief, which the Treasury views as necessary to encourage private investors to accept a high level of risk.

In the past, the creative minds of the financial services industry went to great lengths to devise structures which retained the tax benefits while minimising the risk. The result was normally a Budget announcement bringing the bright idea to an abrupt end.

This cat and mouse game has now finished, but as a consequence of it the rules which govern the three current schemes – enterprise investment schemes (EISs), seed enterprise investment schemes (SEISs) and venture capital trusts (VCTs) – are highly complex.