Detail of outcome
This consultation contributed to the The Venture Capital Trust (Exchange of Shares and Securities) (Amendment) Regulations 2018.
The Finance Act 2016 introduced rules that prescribe the non-qualifying holdings that a VCT may have. These rules took effect from 6 April 2016 but don’t apply to non-qualifying investments made before that date. These investments can continue to be held by a VCT.
The new power will be for HM Treasury to make regulations that will now provide broadly similar protection to VCTs to that currently afforded by the regulations on exchanges of qualifying investments, the Venture Capital Trust (Exchange of Shares and Securities) Regulations 2002. Without these amended regulations VCTs will continue to have to rely upon HM Revenue and Customs exercising its discretion to avoid immediate loss of approval when an old non-qualifying investment is exchanged for a new non-qualifying investment.
The draft consultation seeks comments from stakeholders on the draft statutory instrument. In particular, we seek a better understanding of the:
- impact of these regulations on share re-organisation or company re-structuring.
- time limits within which it is reasonable to expect a VCT to liquidate holdings of new non-qualifying investments obtained in these exchange transactions
After consultation the regulations will be enacted under the negative procedure.
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