VCM69210 - Venture capital trust (VCT) scheme: Winding-up: Limit of value on assets transferred from VCT-in-liquidation to a VCT

SI2004/2199 Regulation 8(1)(c)

Regulation 8 of SI2004/2199 allows shares or securities that were qualifying holdings of a VCT-in-liquidation and were transferred to a VCT to be treated as qualifying holdings in the hands of the VCT to which they were transferred. It applies only to investments that the VCT-in-liquidation has, despite all reasonable endeavours, failed to sell at, or as near as possible to, market value and which are then transferred to a VCT by way of an arm’s length bargain or for a consideration not less than market value (VCM69200).

The application of Regulation 8 is limited to cases in which the aggregate value of any shares or securities transferred “in specie” by a VCT-in-liquidation to VCTs does not exceed 7.5% of the aggregate value of the VCT-in-liquidation’s investments at the start of its winding up.

Determination of value

For the purposes of Regulation 8 the “value” of any investment is the amount ascribed to it in the VCT-in-liquidation’s statement of affairs.

Where there is no statement of affairs, or no equivalent under any foreign proceedings under which the VCT-in-liquidation is being wound up, the value of an investment is its market value (see VCM69200) at the start of the winding up.