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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
Updated
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VCT: VCT returns: identifying investments funding by different issues of shares: further issues

Meaning of ‘further issue’

VCTs may raise money through one or more share issues. A ‘further issue’ of shares is any issue of shares made after an earlier issue of ordinary share capital that was made at a time when the company was approved as a VCT (ITA07/S280(1)).

The 3-year disregard

The use of the money raised by the further issue, and the use of any money deriving from that use, is disregarded for accounting periods ending no more than 3 years following the further share issue for the purpose of the 70% qualifying holdings condition and the 30% or 70% eligible shares condition: ITA07/S280(2) (see VCM54170).

If the VCT is disregarding any investments or money under this rule then it needs to demonstrate that the investments or money being disregarded have been directly or indirectly funded out of the money raised by the further issue.

VCM58070 explains how the origin of funds can be demonstrated.

Interaction of the 3-year disregard and the tranche size limit ITA07/S292A

Although funds from a further issue are not taken into account for the 70% qualifying holdings condition and the 30% or 70% eligible shares condition for a three year period, investments of such funds still count for the purposes of the tranche size limit at the time when they are made (VCM55130).