Aim is to raise demands for incentives to innovative companies

THE coalition government today faces calls for greater tax incentives to boost investment in Aim, which plays host to a large number of Scotland's listed companies.

A report from Grant Thornton and the London Stock Exchange (LSE) presses for a more favourable capital gains tax regime around investing in Aim-listed firms, which tend to be young SMEs with high-growth potential.

The participation of venture capital trusts, plus the inclusion of Aim securities in high street individual savings accounts (ISAs) would also boost the trade of shares on the market, the report suggests.

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Although Aim-listed companies last year contributed 21 billion to the UK economy and supported 570,000 jobs, the market has previously been criticised for a lack of liquidity compared to the main market.

Experts warn that young firms, particularly in fields such as life sciences, have got stuck on Aim in the past as they have been saddled with the high costs and arduous reporting responsibilities associated with a public listing yet have been unable to raise further funds.

Today's report sets out five measures to boost trading on the market, which Grant Thornton and the LSE argue plays an important part in helping emerging companies to raise funds for expansion.

The proposals, which will be debated at an event in Edinburgh tonight, include a commitment to existing incentives for at least five years and raising the gross asset test for venture capital trusts to 15 million and 250 employees.

Mark Fahy, senior manager at the LSE, said: "Scottish companies have been increasingly active on Aim with the recent fundraisings of both Faroe Petroleum and Omega Diagnostics alongside the flotation of Edinburgh-based Easydate earlier in the year and the imminent flotation of 3D Diagnostic Imaging out of Dundee.

"As the economy recovers and access to growth capital becomes ever more important for growing businesses, Aim remains open for business with the additional benefits of access to increased profile and liquidity through the public markets."

George McCracken, head of tax at Grant Thornton in Scotland, said: "Aim is already a hub of entrepreneurial activity, but it is vital that the market can draw on the most supportive business environment possible if it is to achieve its full potential in helping power economic recovery.

"Scotland and the rest of the UK needs to nurture, support and encourage a culture of innovation, investment and enterprise, to help rebalance the economy and to deliver sustainable and high economic growth over the coming years.Aim plays an important role in ensuring that innovative small and medium sized companies have access to external finance to expand."

Other Scottish firms listed on Aim include Celtic Football Club and Goals Soccer Centres.