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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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VCT: investor CG deferral relief: when is the deferred gain brought back into charge?

TCGA92/SCH5C/PARA3

The deferred gain, or part of the deferred gain, will be brought back into charge when there is a chargeable event. TCGA92/SCH5C/PARA3 (1) lists the following chargeable events:

  1. There is a disposal of the VCT shares by the investor except a disposal to their spouse or civil partner which is covered by the no gain/no loss rule in TCGA92/S58, seeCG22200 onwards.
  2. There is a disposal of the VCT shares by a person who acquired them on a no gain/no loss transfer from their spouse or civil partner, the original investor. This does not apply to a no gain/no loss disposal back to the same spouse or civil partner.
  3. There is a share exchange or company reconstruction or amalgamation in which the original shares do not have CGT disposal relief, and the new assets are not ordinary shares in a VCT. For further details see VCM53110 onwards.
  4. The investor becomes non-resident within three years (five years where the shares were issued before 6 April 2000) of the issue of the VCT shares, subject to the exception at VCM53130.
  5. A person who received the shares on a no gain/no loss transfer from their spouse or civil partner becomes a non-resident within three years (five years where the shares were issued before 6 April 2000) of the issue of the VCT shares. This is subject to the exception at VCM53130.
  6. The company loses its approval as a VCT. This is full approval or approval which has become full, see VCM52120. If provisional approval is lost the company is treated as though it was never a VCT, see VCM52110.
  7. The ‘front-end’ income tax relief on investment which allows the taxpayer to make the CGT deferral claim is withdrawn or reduced in circumstances in which (a) - (f) above do not apply.