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HMRC internal manual

Venture Capital Schemes Manual

VCT: VCT mergers: ‘front-end’ income tax relief

SI2004/2199 Regulation 11

During the course of merger of two or more VCTs, individual investors may be issued with shares (for example, in exchange for shares in a merging company, or in consideration for the transfer of all or part of the business from a merging company to a successor company, VCM57020).

No ‘front-end’ income tax relief may be claimed in respect of shares issued to effect the merger unless they are ‘shares issued for new consideration’ (VCM57030).

Neither do shares issued in the course of the merger (other than shares issued for new consideration) count towards determining whether the permitted maximum has been exceeded for the purpose of ITTOIA05/Part 6 Chapter 5 (VCM51020).