New financial rules could hit tech firms.

ACCOUNTANCY firm Baker Tilly says new rules in this year's Finance Bill could jeopardise growth plans for tech firms in the North West.

The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are Government initiatives offering tax breaks to small firms.

EIS is for investors buying shares in small private companies, and SEIS is for those investing in even smaller companies.

Both schemes, along with Venture Capital Trusts (VCTs), have raised billions of pounds for small companies and helped drive investment in many companies - particularly the technology sector.

But, as a result of EC direction, new stricter rules affecting the EIS and VCT schemes were introduced in the recent Summer Budget and Finance Bill, which could harm some businesses' growth plans.

These new rules impose a seven year limit on the age of a company that can apply for EIS or VCT finance; a limit in the total lifetime risk finance funds which are raised by a company of PS12m-PS20m for knowledge intensive companies; and a rule that no VCT or EIS funds are to be used for the acquisition of other companies or trades.

Baker Tilly spokesman James Wild said: "These rules could deter acquisitions made to complement or further develop existing technologies or create wider market applications, and yet, ironically, it is these very companies that George Osborne is keen to help grow in the UK."