Income Tax Act 2007 Schedule 2 paragraph 70

The proportion of eligible shares requirement

Section 289 / Schedule 2 paragraph 70 provides a grandfathering relief so that old investments funded by pre-July 1997 money do not prevent a VCT holding from meeting the eligible shares proportion requirement.

• When testing whether a VCT's holding meets the proportion of eligible shares requirement under section 289, certain legacy investments can be disregarded.
• If the requirement would be satisfied once old investments are stripped out, but would fail if they were included, those old investments are treated as if they are not held.
• "Old investments" are shares in or securities of the relevant company acquired before 6 April 2018, funded by money raised through share or security issues made by the VCT before 2 July 1997, or by money derived from the reinvestment of such funds.
• This grandfathering provision ensures that historic investments made with pre-1997 capital do not jeopardise the qualifying status of a VCT's current holdings.