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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 D: relationship of issuing company to UK

Condition D 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). In essence, it ensures that the company carries on its business in the United Kingdom and by implication is within the scope of UK corporation tax. It is at ITA07/S134(5).

More precisely, the company must have carried on its business wholly or mainly in the UK throughout the period ending with the date of disposal of the shares and beginning with the incorporation of the company or (if later) twelve months before the shares in question were issued.

How Condition D has changed over time?

Before ITA 2007, the precursor to Condition D was at ICTA88/S576(4)(c). In relation to shares issued on or after 6 April 1998 it imposed effectively the same conditions on the issuing company.

In relation to shares issued before 6 April 1998 the corresponding condition was that the issuing company was resident in the United Kingdom from its incorporation to the date of disposal of the shares.