The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
CVS allows corporate investors to obtain tax relief on qualifying investments in unquoted trading companies. The scheme has many similarities to the Enterprise Investment Scheme (EIS) for individual investors. CVS is no longer available for investments made on or after 1 April 2010 however it is still important to understand the rules. In particular, CVS companies may require tax advice in respect of the following:
adherence with certain conditions for the relief which must be satisfied for a specified period of time following the share issue (discussed further below)
calculation of withdrawal of relief where conditions not met
provision of compliance statement to HMRC
advice on disposal of CVS shares, eg whether gain is exempt or capable of being deferred, or utilisation / availability of losses
The following tax reliefs are available under CVS:
'investment relief', corporation tax reduction of 20% of the amount invested (capped at the total tax liability for the period)
reinvestment relief allowing gains to be rolled over against investments in CVS shares in a different company
relief for losses on disposal of CVS shares against income
Unlike EIS, there is no upper limit on the amount of investment for which relief is available.
The reliefs are covered in more detail below.
Certain conditions must be satisfied throughout the qualification period of the shares both by the investing company (ie the company acquiring the CVS shares) and the issuing company (ie the company issuing the new shares to the investors).
The qualification period is a period starting with the issue of the shares and ending on the later of:
immediately before the third anniversary of the issue date where the qualifying trade is already being carried on
immediately before the third anniversary of the date on which the trade commences
The investing company must not either:
have more than 30% of the ordinar
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