VCM60426 - VCT scheme: general: inadvertent breach of approval conditions: notification of breach

The company is required to notify CT&VAT ( VCM60010) as soon as it becomes aware that a breach of the conditions has, or will, taken place.

The notification should:

• explain the circumstances and extent of the breach,
• specify what actions the company intends to take to correct the situation, and
• set out the timetable for these actions.

In a few cases a company may be aware of an impending breach before it happens. In such cases the company may approach HMRC before the breach with the projected details. While it will generally not be possible for HMRC to confirm definitely that the breach will be treated as ‘inadvertent’ until all the facts are known, HMRC will be prepared in appropriate circumstances to give a view as to whether approval is likely to be retained. This view may be subject to review if further facts come to light after the transaction.

If HMRC takes the view that the breach is not inadvertent, and the transaction or transactions have not yet taken place, the company will be expected to take appropriate steps to avoid it.

While HMRC will endeavour to deal with notifications promptly it will not necessarily be able to give these applications immediate attention. The company will retain responsibility for maintaining compliance with the approval rules and any failure to do so that is not considered to be an inadvertent breach by HMRC may result in withdrawal of approval. This will apply whether or not the facts of the case have been notified to HMRC before the breach takes place.