Second order does so confuse

“The economic logic for inheritance tax business property relief being granted on investment in Aim quoted shares is baffling,” says Richard Murphy, professor of practice in International Political Economy at Islington Technical College.

“Rarely are these companies real start-ups, and their flotation is more frequently linked to releasing funds for founder shareholders than it is to raising new funds,” he adds. “The merits of attracting funds into this market seem few and far between for a government critically short of tax revenue. If there was an obvious candidate for a wholly unjustified tax relief to be removed then this one should win the prize.”

How do you raise funds for a new business? But showing that there’s a likely exit route to the investors.

Thus, an exit route for investors in a successfully achieved start up aids in raising money for start ups.

19 thoughts on “Second order does so confuse”

  1. I’d say there was a far better caee for Business Property Relief than Agricultural Property Relief.

    There’s probably a better case yet for IHT at 10% with almost no exemptions.

  2. So Fevertree was not a start-up? Doesn’t Snippa realise that it is easier to get your initial investment back if the shares are listed somewhere rather than unlisted? Doesn’t he realise that for every Fevertree there are a thousand Hurricane Energies or Acacia Minings? But then what would the fat bastard know about risk?

  3. “But then what would the fat bastard know about risk?”

    Quite. I’m peripherally exposed to startups (and spinoffs) through work, and frankly the risks investors take in the vast majority of startups is incredible – extremely high risk, extremely high reward for those that make it big.

    And how shysters running a startup can consume the investors’ cash in a heartbeat if they’re not on a tight leash (and even then if they’ve got the “someone else’s money” bug).

  4. “a government critically short of tax revenue”

    I though the State could just print all the money it needed? Or was that yesterdays stump hole?

  5. Good point, Jim, the fat bastard keeps telling us that tax is only for controlling inflation or else to make the taxpayer feel happy about participating in society. Now he decides that Govt expenditure requires tax. You sometimes wonder whether he has a different brain with different views for each day of the week.

  6. Trying to get to the bottom of Murphy’s claims to have ‘invented’ CbcR….

    “Ben Gunn says:

    I thought CbcR was developed for the extractive industries?

    Richard Murphy says:

    The extraterrestrial industries version was developed by me too

    It was a variant that got more traction that the main theme at fist”

    Murphy drifts off into outer space.

    And I’m sure Rocco will be intrigued at the prospect of Murphy becoming involved in fisting.

  7. The extraterrestrial industries version was developed by me too

    You may candidly want to read my latest book: “Tax Abuse in the Andromeda galaxy”.

  8. What a plonker. AIM isn’t for startups. It is a market for companies between startup and incubator phases and a full stock market listing. So no it isn’t necessarily the point at which the founders cash out In many cases it is where small companies go to widen their capital base.

    As the AIM website puts it: “AIM is the most successful growth market in the world. Since its launch in 1995, over 3,600 companies from across the globe have chosen to join AIM. Powering the companies of tomorrow, AIM continues to help smaller and growing companies raise the capital they need for expansion.”

  9. Candidly

    You are forgetting a couple of things:

    For Murphy there is no distinction between Companies in terms of size. A one size fits all approach is the only ‘just’ one

    Additionally, based on my reading of his witterings the optimum tax rate would be total confiscation – anything else would be unjust in some way.

    A Person from Porlock in every sense

  10. Also note that taxation is a legitimate function of government, raising revenue to pay for its lawful functions.

    Government goes tyrannical when it starts talking about functions of taxation other than legally raising revenue.

    To whit:

    ‘If there was an obvious candidate for a wholly unjustified tax relief to be removed then this one should win the prize.’

    Mr. Murphy endorses tyranny.

  11. It’s a golden age for AIM. If you’re a small cap fund manager and haven’t been exposed to AIM then you’ve been neglecting your fiduciary duty. Richard Murphy is so fucking ignorant it’s not funny.

  12. The reason for inheritance tax exemption on farms and small businesses is nothing to do with incentives. They are political exemptions granted after a bunch of sad stories in the press about the family farm having to be sold, or the family business sold.

  13. They are different sorts of story. If a farm is “destroyed” it just means the land is sold to others, perhaps neighbours, who cheerfully carry on farming it. But sometimes a business really will be destroyed – the networks of customers and suppliers, the reliable, skilled workforce, all broken up. That may well be an economic loss not a mere transfer of economic value. Still, 10% and no exemptions would look after that. if the biz can’t take a predictable 10% hit it’s not much of a biz anyway. Hell, at 10% you could buy insurance.

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