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HMRC internal manual

Venture Capital Schemes Manual

Share loss relief: individual and corporate claimants: individual claimants: type of company invested in: qualifying trading company: condition B

Condition B is one of the four conditions (A-D) which must be met by a company in order for it to be a qualifying trading company, and hence for its shares to be qualifying shares for Share Loss Relief purposes (assuming Enterprise Investment Scheme relief is not attributable to them). Condition A contains requirements about the company’s activities, its place in any group to which it belongs, how it is controlled and how independent it is - see VCM74300+. Condition B imposes further demands as to the period throughout which the requirements in Condition A are met.

Condition A refers to the date on which the company’s shares are disposed of. A time (up to three years earlier) at which any of the requirements ceased to be met may also be relevant in deciding whether Condition A is met. Condition B further demands that the four requirements in Condition A should be met either

  • for a continuous period of six years ending on that date or at that time; or
  • for a shorter continuous period ending on that date or at that time, provided that before the beginning of that period the company was not an excluded company, an investment company or a trading company. For the meanings of these terms, see VCM74990.

How has condition B changed over time?

Condition B is at ITA07/S134(3). It was previously at ICTA88/S576(4)(b) where it applied the same conditions to disposals before 6 April 2007.

The Condition has been substantially unchanged since the introduction of Share Loss Relief by FA 1980. That is to say, although the requirements to be satisfied by the company have changed from time to time before achieving their form in Condition A, the periods throughout which those requirements must be met have remained as described above.