VCM45600 - VC loss relief: general: qualifying trading company: shares issued on or after 6 April 1998
ICTA88/S576 (4)
FA98 introduced changes to VC loss relief that affect:
- for disposals made on or after 6 April 1998, the rules in ICTA88/S576 (1) that apply where the claimant has a ‘mixed holding’ (that is some of the shares held qualify for relief and some do not - see VCM47000 onwards), and
- for shares issued on or after 6 April 1998, the rules in ICTA88/S576 (4) that identify what is a qualifying trading company.
For shares issued on or after 6 April 1998 a qualifying trading company is a company satisfying each of the following four conditions:
- The company must have been:
- an unquoted company within the EIS meaning of that expression (see VCM15020) when the shares were issued, and
- there must have been no arrangements in place then for it to cease to be an unquoted company, and
- in relation to shares issued before 7 March 2001, the company must not have ceased to be an unquoted company before that date.
- The company must either:
- be an eligible trading company for the purposes of ICTA88/S576 (see VCM45650)at the date of disposal, or
- have ceased to be such a company at a time not more than three years before the date of disposal and not, since it ceased to be such a company, have been an excluded company (see VCM45500), an investment company (see VCM49150) or a trading company (see VCM45550) that is not an eligible trading company.
- The company must either:
- have been an eligible company for a continuous period of six years ending on the date of disposal, or at the time of cessation of trading where this was not more than three years before the date of disposal, or
- have been an eligible company for a shorter continuous period ending on the date of disposal, or at the time of cessation of trading where this was not more than three years before the date of disposal, and not have been before the beginning of that period of trading an excluded company, an investment company or a trading company that was not an eligible trading company.
- The company must have carried on its business wholly or mainly in the United Kingdom throughout the relevant period (see VCM45450).
These conditions are similar to those described in VCM45350, which applied to shares issued before 6 April 1998. The changes made by FA98 align the requirements for companies to which the VC loss relief regime applies with those qualifying for companies that could qualify for the EIS.
