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HMRC internal manual

Venture Capital Schemes Manual

VCT: VCT qualifying holdings: requests for advance assurance: responding to applications

The response to an application for an advance assurance will take the form of a statement as to whether, on the basis of the information provided, HMRC 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).

An advance 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.

An advance assurance will not cover the status of the VCT itself, that is, whether the investment would enable the VCT to meet the conditions for approval under section 274 ITA 2007. Those conditions depend upon the VCT’s other investments. 

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).

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

Where the officer is unable to give an advance 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.

Once a refusal has been issued HMRC will not engage in further technical correspondence about the circumstances of the investment. The company may submit a new application if the details of a prospective investment change.

We aim to respond to a company’s application within 15 working days, and no later than 40 days. However, complex cases may take longer to deal with. Companies should follow the guidance in VCM55370 to help them provide all the relevant information, to help minimise the time taken to consider the application.