Corporate Venturing Scheme (CVS)

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

Corporate Venturing Scheme (CVS)
Introduction
Conditions for CVS relief
Corporation tax relief
Chargeable gains relief for CVS shares
Losses on sales of CVS shares
Anti avoidance
Withdrawal of relief other than on sale
Claims, compliance and administration
Further reading

Introduction

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

Tax reliefs available

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.

Conditions for CVS relief

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).

FA 2000, Sch 15, para 3