VCM62040 - VCT scheme: qualifying holdings: guaranteed loans

ITA/S288

Where a holding in a company includes securities (see VCM62050) and the money used for its acquisition was originally raised after 1 July 1997 (see VCM62020), the holding cannot be part of the VCT's qualifying holdings if there are any arrangements which would guarantee the repayment of the securities by a third party (other than a subsidiary of the company) in the event of a default by the company.

Note that this rule prevents the whole of the holding in the company (including any shares) from qualifying. There is no provision for it to be divided into qualifying and non-qualifying parts.