The Business Expansion Scheme has only partially lived up to the hopes of the government when it introduced it, and every year, the Chancellor has to tinker a little more with the rules in order to curb the more flagrant excesses – first it was farm land, then cellarsful of fine wine quietly appreciating, then companies where the risk was reduced to no higher than any company on the full list of the Stock Exchange because the money being raised was fully backed by assets, usually property. But even nursing homes, fashionable a couple of years ago, have shown that they are quite capable of running into financial difficulties, and the range of businesses that have raised, or are currently seeking to raise, money under the scheme are wondrous in their diversity – one to resurrect the derelict Playhouse Theatre just off London’s Embankment, another operating a chain of garden centres and coming back for more; there is the estimable Thames Line, currently in the hunt for money to eanble it to operate a fleet of river buses between Chelsea and Greenwich, and there’s Edinburgh Tankers, formed to take advantage of the fact that support for the moribund shipping sector was added to the list of qualifying trades last time around. But the primary aim of the scheme is still to foster innovative high-tech start-ups that could be the Oxford Instruments and Quantels of tomorrow if only they could find a ready source of cash to get them started. And one sponsor that is entirely true to the spirit of the Business Expansion Scheme is Octagon Investment Management Ltd of London SW. Octagon next week opens for subscription The Octagon Spring 1987 BES Fund, and subscriptions must be in by March 20, by which time Octagon hopes to have raised UKP1m, all fully tax-deductible at investors’ marginal rate of tax. The advantage of a fund is of course that the investor’s risk is spread across several prospects, and Octagon is currently nuturing 26 such companies; one or two of the existing ones may well receive additional investment from the new fund, and the rest will be newcomers. The minimum subscription is UKP3,000, which with a maximum of only UKP1m is likely to mean that investors will effectively be putting UKP300 to UKP500 in each of the constituent companies of the fund. Some Business Expansion Scheme offers have been little more than ramps because the built-in incentives for the managers and investment advisors are structured so as to garner the lion’s share of any capital appreciation, but Octagon sets a strict limit of no more than 15% of the amount invested on behalf of investors for such incentives. Shares must be retained for five years in order to fulfil the qualification for full tax relief, and Octagon will be ensuring the usual exit routes for holders after five years – a flotation on the Third or Unlisted Securities Market, acquisition, sale to a group of institutions, or, less likely, a buy-in of its own shares.