Industry pressure group The Real Time Club (RTC) is planning to lobby the government and Department of Trade & Industry to relax tax laws for Vars investing in startup software companies.
The proposal is one of 23 additional recommendations to a Bank of England report on the funding of high-tech small and medium enterprises.
Backed by the Computer Software Services Association (CSSA), the RTC has also suggested that National Lottery cash be used as a possible source of funding.
Charles Ross, founder of the RTC, said the organisation will be lobbying the DTI and ministers to give greater help to new high-tech companies. ?We are not asking for aid but help to facilitate an environment in which people can contribute some more to encourage start-up firms.?
The RTC said Vars would be well-suited to identify and invest in software startup companies, but must be given some form of incentive.
In its response to the Bank of England report, RTC stated that Vars could incorporate the product of a software startup into its own products, but tax and intellectual property rights issues must be straitened to offer encouragement to Vars.
Ross also suggested that National lottery funds could be rerouted to finance new high- tech firms. In its report, the RTC said the Lottery could set up annual venture capital funds ?to invest in early-stage strategic industry concerns?.
A stipulated amount would be diverted into a fund, and some lottery winners would have a proportion of their winnings paid out in the form of fund shares. Each annual fund would be wound up after a specified period, and the proceeds distributed to the shareholders.
The RTC?s suggestions have been endorsed and supported by the CSSA. Rob Wirszycz, CSSA director general, said: ?If the UK is to avoid falling dangerously behind the rest of the world in this extremely competitive arena, new approaches to corporate finance and other forms of financing must be found, and found soon.?
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