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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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VCT: VCT approval: conditions for full approval


To be approved as a VCT a company must not be a close company and must satisfy HMRC that in relation to its most recent complete accounting period:

* The VCT’s ordinary share capital has been or will be admitted to trading on a regulated market in accordance with Directive 2004/39/EC of the European Parliament (seeVCM54040)   listing condition
* its income in that accounting period was derived wholly or mainly from shares or securities (see VCM54050).   nature of income condition
* it did not retain more than 15% of its income derived in that accounting period from shares and securities (see VCM54060).   income retention condition
* no holding in any company represented more than 15% by value of the VCT’s investments at any time during that accounting period (see VCM54070).   15% holding limit condition
* at least 70% by value of its investments were in qualifying holdings of shares or securities throughout that accounting period (see VCM54080 onwards).   70% qualifying holdings condition
* at least 30% by value of its qualifying holdings were in holdings of eligible shares throughout that accounting period; this applies to shares issued before 6 April 2011 and to shares acquired after that date by protected money (see VCM54140).   30% eligible shares condition
* from 6 April 2011 at least 70% by value of its qualifying holdings were in eligible shares throughout that accounting period; this applies to shares acquired by money raised after this date (see VCM54140).   70% eligible shares condition
* The VCT has not made and will not make an investment in the relevant period in a company, which breaches the permitted investment limit (see VCM54180).   investment limits condition

If the VCT issues further ordinary shares, the relaxation described in VCM54170 will apply.

A company satisfying these conditions will receive an approval notice (VCM54300) specifying:

  • the date on which the approval is given, and
  • the date from which approval shall have effect.

With effect from 6 April 2007 the term ‘investment’ throughout ITA07/Part 6/CH3 includes cash and other funds held by the VCT or held by a third party on its behalf- see VCM54090.