Chancellor Rebuffs MP’s Attempt to Reinstate B4RN’s EIS Tax Relief

The former leader of the UK Liberal Democrat party and MP for South Lakes, Tim Farron, has accused the Chancellor (Philip Hammond) of “fobbing off local communities” by effectively imposing a “tax rise” on rural broadband ISP B4RN with its decision to withdraw their EIS tax relief.

At the start of this year ISPreview.co.uk revealed that the Government had decided B4RN, as well as other Community Benefit Society (CBS) based broadband operators, were seemingly no longer eligible to benefit from any tax breaks or other support afforded by the Enterprise Investment Scheme (here) because their approach was “fundamentally uncommercial” (i.e. not setup to make a profit, which is true).

Providers like B4RN typically build Gigabit capable “full fibre” (FTTH) broadband networks in some of the most challenging rural areas. In order to do this they rely on volunteers helping to build the network (usually in exchange for shares instead of cash) and landowners (e.g. farmers) agreeing to waive their right to payment under a wayleave (access) agreement.

However such providers make no secret of the fact that any money they make is then reinvested back into their network and used to further improve coverage or service quality. The loss of EIS support was thus a big blow to B4RN’s deployment strategy (i.e. it’ll now take them and others like them a lot longer to roll-out into new areas).

In response Tim challenged the Chancellor over this and Philip Hammond said he would be “happy to look at them” again and respond to the MP (here). At the end of last month Tim finally got a response, albeit one from HMRC saying they wouldn’t comment on a private company’s affairs. No mention of any review. Tim has now written to the Chancellor again.

Tim Farron said (Letter Extract):

“B4RN have worked absolute wonders to provide some of the fastest internet speeds in the country to some of our most rural communities, reaching parts of Cumbria and Lancashire that the Government and BT couldn’t or wouldn’t reach.

Therefore, to disincentivise people from investing in B4RN will clearly damage the delivery of high-speed connectivity in rural areas.

I am astonished that you could condone this decision which might overturn the capacity of B4RN to deliver your policy on rural broadband at minimal cost to the Government.

This policy, which would seem to have been made by HMRC on the hoof, MUST be reviewed and then reversed.”

One fear is that if operators of a similar size cannot access this kind of support then it may simply result in the Government needing to dole out even more public funding (vouchers etc.) in order to resolve a problem that, in some areas at least, the local community could have done by itself.

Meanwhile B4RN has moved on and recently launched a crowdfunding drive with the aim of raising £3m (minimum of £1m) to support its future plans (here). Clearly they aren’t expecting a change of heart from the Government and since the recent launch they’ve already raised over £100,000. But there’s still a long way to go over the next 54 days.