Don't invest in tax
A REGRESS report has come in from the Buckmaster Development Fund, the Busi- ness Expansion Scheme fund which City and Suburban has been monitoring. This fund (you may recall) was established by Credit Suisse Buckmaster & Moore, now a subsidiary of one of the big three Swiss banks, to invest in low-risk, low- technology companies. These qualify equally with high-risk, high-tech invest- ments for tax relief under the scheme, and should be ready for sale or flotation at the end of the five-year qualifying period, to give the investor his tax relief and his capital repayment. Three of the five years are up, and more than half of the seven selected low-risk companies have now gone bust. Say the fund's managers: 'There is no prospect of any repayment of the monies committed in the cases of Pat Jessop and Sons, Nicholas John, Facit- crest, and now Concertina Publications.' Two years and three companies to go. Of the three, two are doing well and one, a computer software house, has needed `measurable medium-term cash support' to reach 'approximately break-even'. Most BES schemes have been more ambitious, and some of them dubious. This one is a warning that, even (as here) with reputable managers, tax management is one thing and investment management another. Nigel Lawson has been talking of cutting our tax rates to compete with the United States' top rate of 28 per cent. The early BES schemes gave relief on a top rate of 75 per cent. The next ones may have to depend on their merits as investments.
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