VCM50630 - CVS: investors and reliefs: receipt of value: insignificant value

FA00/SCH15/PARA47 (7)

Where the amount of the value received is ‘insignificant’ it is ignored. An amount is insignificant for this purpose if:

• it does not exceed £1000, or
• it is insignificant in relation to the amount subscribed by the investing company for its shares in the issuing company.

Our view is that for the purpose of the second category above ‘insignificant’ must be given its normal dictionary meaning of trifling or completely unimportant. Thus in most cases it is very unlikely to cover any amount in excess of £1000. Cases of doubt should be referred to CT&VAT (Technical).

Where there is more than one receipt that is, on its own, insignificant as defined, the rule must be applied to the total amount received within the period of restriction. For example, suppose a qualifying investing company received value of £600 on 1 February 2002 and the same sum every three months thereafter. Assuming £1200 was not regarded as insignificant, the company would be regarded as receiving value of £1200 on 1 May 2002, a further £1200 on 1 November 2002, and so on.

To ensure that this relaxation is not used for avoidance purposes, it is provided that the amount of any value shall not be regarded as insignificant if it is received under arrangements that exist at any time in the 12 months ending on the date of the share issue.