VCM54020 - VCT: VCT approval: conditions for full approval

ITA07/S274

To be approved as a VCT a company must not be a close company and must satisfy HMRC that in relation to its most recent complete accounting period:

Description Condition
the VCT’s ordinary share capital has been or will be admitted to trading on a regulated market in accordance with Directive 2004/39/EC of the European Parliament (seeVCM54040) listing condition
its income in that accounting period was derived wholly or mainly from shares or securities (see VCM54050). nature of income condition
it did not retain more than 15% of its income derived in that accounting period from shares and securities (see VCM54060). income retention condition
no holding in any company represented more than 15% by value of the VCT’s investments at any time during that accounting period (see VCM54070) 15% holding limit condition
at least 70% by value of its investments were in qualifying holdings of shares or securities throughout that accounting period (see VCM54080 onwards) 70% qualifying holdings condition
for accounting periods ending before 6 April 2018, and in relation only to shares issued before 6 April 2011, and to shares acquired using protected money before 6 April 2018: at least 30% by value of its qualifying holdings were in holdings of eligible shares throughout that accounting period (see VCM54140) 30% eligible shares condition
at least 70% by value of its qualifying holdings were in eligible shares throughout that accounting period (see VCM54140) 70% eligible shares condition
the VCT has not made, and will not make in future, an investment which is neither of: an investment included in the company’s qualifying holdings; an investment within subsection (3A) non-qualifying investments condition
the VCT has not made, and will not make in future, an investment, which breaches the permitted investment limit (see VCM54180) investment limits condition
for investments made in accounting periods starting on or after 6 April 2018: the company has not breached, and will not breach in future, the minimum investment on further issue condition (see VCM54182) minimum investment on further issue condition
the VCT has not made, and will not make in future, an investment in a company which breaches the permitted maximum age limit (see VCM54183) permitted maximum age condition
the VCT has not made, and will not make in future, an investment in a company which breaches the prohibition on business acquisitions (see VCM54184) no business acquisition condition

If the VCT issues further ordinary shares, the relaxation described in VCM54170 will apply.

A company satisfying these conditions will receive an approval notice (VCM54300) specifying:

  • the date on which the approval is given, and
  • the date from which approval shall have effect.

The term ‘investment’ throughout ITA07/Part 6/CH3 includes cash and other funds held by the VCT or held by a third party on its behalf- see VCM54090.