VCM12080 - The investment process: employment of money: overview

Each scheme has rules requiring the money raised by a share issue to be “employed” within a certain time. For the EIS and the CVS, this is dealt with at VCM12090. For the VCT scheme see VCM62150.

Money is most obviously “employed” when it is spent. However, money which is retained on current account may be regarded as employed for the purpose of the company's trade if its retention can reasonably be regarded as necessary or advisable for the purpose of financing current business requirements. But setting money aside to satisfy a contractual obligation which will become due at a later date does not constitute employment.

The company may choose to place the money to which the rule applies in a separate bank account so that it can keep track of how it is used. However, we do not insist on this. Any identification of money spent or otherwise employed which the company may wish to make and which is not inconsistent with the facts may be accepted, provided that the company accepts that it is committed irrevocably to that identification.