VCM62170 - VCT scheme: qualifying holdings: company using the money

ITA/S294 The rules governing the companies that must make use of the money raised by a share issue differ depending on whether the shares are issued before or after 17 March 2004.

Share issues before 17 March 2004

In the case of share issues before 17 March 2004 the company which uses any of the money raised by an issue (a 'trader company') must, when the shares are issued and at all subsequent times, be one of the following:

• a company which exists for the purpose of carrying on a qualifying trade (disregarding any purpose concerned with holding shares in subsidiaries, making loans to other group companies, and holding and managing property used by any group company for a trade or for research and development), or
• a subsidiary company which exists for the purpose of holding and managing property used as described above.

If the trader company is a subsidiary, it must be at least 90% owned (see VCM15060).

Share issues on or after 17 March 2004

In the case of share issues on or after 17 March 2004 the ‘trader company’ requirement is replaced. For such share issues the requirement is that where a VCT invests in a company the trade, or research and development, that benefits from the VCT investment must be carried on by the company in which the investment is made, or a relevant qualifying subsidiary ( VCM12100) of that company, but it need not be the same company at all times.