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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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VCT: VCT qualifying holdings: requests for advance assurance: responding to requests

The response to a request for an assurance will take the form of a statement as to whether, on the basis of the information provided, the Inspector is satisfied that following the issue of the holding that holding will comply with the requirements of ITA/Part 6 Chapter 4 insofar as that is possible at the time the investment is made (and, where applicable, that the shares to be issued will be eligible shares).

The assurance does not indicate an acceptance by HMRC that the company will continue to meet all of the requirements which must be met continuously in order for the company to continue to be part of the VCT’s qualifying holdings. The onus is on the VCT to ensure that it is aware of the implications of any changes in the company’s activities or structure so that it may exclude the company from its qualifying holdings in later accounting periods if appropriate.

In some cases there will be a clear indication in the company’s application for advance assurance that the company may at some future time cease to satisfy one of the conditions (for example, excluded activities which the company intends to carry on might come to be a substantial part of its trade, see VCM3000+). As explained above, the assurance given relates only to the likelihood of the requirements being met at the point at which the investment is made. The assurance may include a reminder about the need for the company to meet the conditions for a continuing period, and may incorporate an explanation as to how it is proposed to apply the test in question (for example, how it is proposed to decide whether the excluded activities make up a substantial part of the trade).

In some cases whether a requirement (see VCM55020) needs to be satisfied may depend on when the VCT originally raised the money which it is investing. Where appropriate, an assurance may be given in such a case subject to the proviso that the money to be invested is money which the VCT raised before the date in question.

Where a company supplies valuations or forecasts responsibility for their accuracy lies entirely with the company.

Where the officer is unable to give a favourable response to a request for an assurance, a brief explanation of the reason will be given. But it is entirely the company’s responsibility to decide what amendment, if any, it should make to its proposals.