VCM8200 - Venture Capital Schemes: Venture Capital Trusts

VCT status

As explained at VCM54000+ a VCT must meet a number of conditions to be, and remain, approved as a VCT.

F(2)A 2015 extended the investments limits condition and added two further conditions, the permitted maximum age condition and the no business acquisition condition.

If a VCT invests in a company that breaches one of these three conditions it is possible for the VCT to lose its status as a VCT.

However HMRC will not normally exercise its discretion to withdraw approval from the VCT under ITA07/S281(1) provided:

• The VCT notifies HMRC immediately it appears that a condition will be breached and
• The VCT can demonstrate that it has resisted any proposals to breach the conditions and that the actions that led or will lead to breaching the conditions were or are outside the VCT’s control.

Each breach or potential breach will be decided on a case by case basis.