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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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VCT: VCT approval: breach of approval conditions: circumstances in which a breach can occur

SI1995/1979 Regulation 8

A breach of the approval conditions can occur in the following circumstances.

Throughout the provisional and the full approval periods

  • The company’s income in an accounting period is not derived wholly or mainly from shares or securities (VCM54050).
  • A holding in any company (other than a holding in another VCT, or a company that would qualify as a VCT were it included in the official UK list) represents more than 15% by value of the company’s investments at any time (VCM54070).
  • The company’s ordinary share capital is not included in the official UK list at any time or after 6 April 2011 not admitted to trading on an EU regulated market (VCM54040).
  • The company retains an amount greater than 15% of the income it derived in any accounting period from shares or securities (VCM54070).

At the end of the provisional period and thereafter

  • Less than 70% by value of the company’s investments is represented by shares or securities comprised in qualifying holdings at any time VCM54080 onwards).
  • Less than 30% by value of the company’s qualifying holdings is represented by holdings in qualifying shares at any time (VCM54140). From 6 April 2011 the minimum value of the company’s qualifying holdings will be raised to 70% for investments made from money raised after that date

In addition, HMRC may withdraw provisional approval if it is satisfied that one or more of the above conditions will not be fulfilled at the end of the provisional period or in the first accounting period thereafter.