VCTs—VCT conditions for HMRC approval
VCTs—VCT conditions for HMRC approval

The following Tax practice note provides comprehensive and up to date legal information covering:

  • VCTs—VCT conditions for HMRC approval
  • Definition of venture capital trust
  • Summary of conditions for HMRC approval
  • The relevant period during which conditions must be met for full HMRC approval
  • The relevant period during which conditions must be met for provisional HMRC approval
  • The listing condition
  • The nature of income condition
  • Meaning of securities
  • The income retention condition
  • The 15% holding limit condition
  • More...

Like the enterprise investment scheme (EIS), the venture capital trust (VCT) regime is designed to encourage investment in smaller, higher-risk trading companies. A VCT is a company (not a trust), approved by HMRC, whose shares are admitted to trading on an EU-regulated market (which includes the main market of the London Stock Exchange). Individuals can benefit from a range of tax reliefs, and spread their investment risk, by subscribing for (or buying) shares in a VCT, which, in turn, subscribes for newly issued shares or debt in unquoted companies (companies listed on AIM or PLUS markets (other than the PLUS-listed market) are unquoted for these purposes).

Further details of the tax reliefs available to individual investors in VCTs and the corporation tax reliefs available to VCTs themselves, can be found in Practice Note: VCTs—introduction to regime and description of tax reliefs.

The VCT regime is prescriptive and sets out a number of requirements that must be met before these tax reliefs are available. This Practice Note explains the conditions that must be met by the VCT itself, including those that must be satisfied for the VCT to obtain HMRC approval.

Further conditions must be met in relation to the VCT's qualifying holdings in investee companies, as explained in Practice Notes:

  1. VCTs—qualifying holdings: shares or securities, the funds raised and the arrangements in general

  2. VCTs—qualifying holdings: investee companies,

Popular documents