AIM is one of the UK’s rare success stories, in fact probably the best growth market for smaller companies in the world. Despite the occasional high-profile failure, it possesses a better record for avoiding scams and frauds than others.
It is therefore clear to us that the value to the UK economy of the mild encouragement provided by the IHT concession to those considering an IPO onto AIM is a very large multiple of the cost in tax foregone by HMRC.
A recent report by Grant Thornton on AIM’s first 25 years shows that small companies listed on AIM perform ‘better’ - generating more added value, more employment and far greater tax receipts for HMRC - than comparable “private” companies. This is interesting: we have heard too much about companies run by private equity doing better by being out of the glare of publicity attached to quoted status.
AIM companies contribute over £33bn Gross Value Added (GVA) directly – over 40% more per employee than the national average - and just as much indirectly to the UK economy since their direct GVA has increased by 35% in the last five years, more than twice as fast as the average. Not only are AIM companies more productive than average, their productivity is growing - at 11% pa, significantly faster than average.
AIM’s superior growth has, in just the last five years, added £4.7bn pa to UK economy and more than £1bn pa to HMRC. But you may ask, at what cost? The IHT concession is not a precise sum that can be easily calculated, but we reckon it ‘costs’ the Treasury c. £50m pa.