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HMRC internal manual

Community investment tax relief manual

Qualifying investments: Shares

CTA2010/Part 7/Chapter 2/s228; ITA/s347

For shares to be treated as a qualifying investments (CITM4010) under the CITR scheme they must satisfy two conditions.

Condition 1: Subscription and Payment

The shares must have been subscribed for wholly in cash (which is interpreted as including cheques and foreign currency) and be fully paid for on the investment date.

Shares are not regarded as fully paid for if there is any undertaking to the community development finance institution (CDFI) to pay cash at some future date in connection with the acquisition of the shares.

Condition 2: Conversion and Redemption

The shares must not carry any present or future right to be redeemed within five years of the day the investment is made.

Neither must the shares carry any present or future rights that would allow them to be converted into, or exchanged for any loan, securities, shares or other rights that are redeemable within five years of the day the investment is made.

The rights carried by shares are usually as set out in the company’s Articles of Association or as determined by a resolution of the company.