VCM54184 - VCT: VCT approval: no business acquisition condition

ITA07/S274(2) and S280D

A VCT is prohibited, in any accounting period, from making any investment in a company which breaches the no business acquisition condition. The rules are the same as apply for the purposes of ITA07/S293(5ZA) to (5ZC) in determining whether a holding is ‘qualifying’ or not.

The same permitted maximum age rules apply to a company whether it receives an investment by a VCT or through the EIS.

An investment breaches the prohibition on business acquisitions if any of the money raised by it is employed (whether on its own or together with other money) on the acquisition, directly or indirectly, of–

(a) an interest in another company such that a company becomes a 51% subsidiary of the relevant company

(b) a further interest in a company which is a 51% subsidiary of the relevant company

(c) a trade

(d) intangible assets employed for the purposes of a trade, or

(e) goodwill employed for the purposes of a trade.

See VCM8150+ for more details on the no business acquisition.