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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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VCT: VCT qualifying holdings: guaranteed loans

ITA07/S288

Where a holding in a company includes securities (see VCM54090) and the money used for its acquisition was originally raised after 1 July 1997 (see VCM55020), the holding cannot be part of the VCT’s qualifying holdings if there are any arrangements which would guarantee the repayment of the securities by a third party (other than a subsidiary of the company) in the event of a default by the company.

Note that this rule prevents the whole of the holding in the company (including any shares) from qualifying. There is no provision for it to be divided into qualifying and non-qualifying parts.