VCM60110 - Venture capital trust (VCT) scheme: General: Approval - conditions for full approval
ITA/S274: SI1995/1979 Regulation 4
To be approved as a VCT a company must not be a close company and must satisfy HMRC that in relation to its most recent complete accounting period:
- its income in that accounting period was derived wholly or mainly from shares or securities (see VCM60130)
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(the nature of income condition); |
- at least 70% by value of its investments were in qualifying holdings of shares or securities throughout that accounting period (see VCM60135 onwards)
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(the 70% qualifying holdings condition); |
- at least 30% by value of its qualifying holdings were in holdings of eligible shares throughout that accounting period; this applies to shares issued before 6 April 2011 and to shares acquired after that date by protected money(see VCM60140 and VCM60145)
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(the 30% eligible shares condition); |
- from 6 April 2011 at least 70% by value of its qualifying holdings were in eligible shares throughout that accounting period; this applies to shares acquired by money raised after this date (see VCM60140 and VCM60145)
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(the 70% eligible shares condition); |
- no holding in any company represented more than 15% by value of the VCT’s investments at any time during that accounting period (see VCM60160)
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(the 15% holding limit condition); |
- its ordinary share capital was included in the official UK list throughout that accounting period; on or after 6 April 2011 a VCT be admitted to trading on a regulated market in accordance with Directive 2004/39/EC of the European Parliament (seeVCM60111)
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(the listing condition); and |
- it did not retain more than 15% of its income derived in that accounting period from shares and securities (see VCM60170)
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(the income retention condition). |
With effect from 6 April 2007 the term “investment” throughout ITA/Part 6 Chapter 3 includes cash and other funds held by the VCT or held by a third party on its behalf- see VCM60135.
The company must also satisfy CT&VAT London that these conditions will be met in relation to the accounting period which is current when the application for approval is made.
However, if the VCT issues further ordinary shares, the relaxation described in VCM60180 will apply.
A company satisfying these conditions will receive an approval notice specifying:
- the date on which the approval is given, and
- the date from which approval shall have effect.
