What does section 272 of the Income Tax Act 2007 do?

Section 272 gives the Treasury broad power to make regulations governing how claims for VCT income tax relief, capital gains tax reliefs on VCT shares under TCGA 1992, VCT dividend exemptions, and related reliefs are made and processed. Without compliance with these regulations, relief cannot be granted.

Which reliefs are covered by the Treasury's regulation-making power under section 272?

The reliefs covered include VCT income tax relief, capital gains tax reliefs on disposal of VCT shares under section 151A of TCGA 1992, the deferred charge on reinvestment under Schedule 5C to TCGA 1992, exemption from income tax on VCT dividends under ITTOIA 2005, and reliefs under regulations made under Chapter 5 of Part 6 ITA 2007.

What happens if an investor does not follow the prescribed VCT claims procedure?

If the investor does not make a claim in accordance with the Venture Capital Trust Regulations 1995 or fails to meet the requirements set out in those regulations, the relief will not be granted, even if the underlying investment would otherwise qualify for VCT relief under United Kingdom law.

How is the VCT relief claims procedure exercised in practice?

The Treasury's power has been exercised through the Venture Capital Trust Regulations 1995 (SI 1995/1979). In practice, the VCT issues a certificate to the investor confirming the qualifying investment. The investor then uses this certificate to support their claim for income tax relief in the prescribed manner.

Income Tax Act 2007 section 272

Regulations as to procedure etc.

Section 272 gives the Treasury the power to make regulations governing how claims for VCT relief and related reliefs are made and processed.

The section covers VCT income tax relief, capital gains tax reliefs under TCGA 1992, VCT dividend exemptions, and reliefs under related regulations.
The Treasury may make whatever regulations it considers appropriate to give effect to these VCT-related reliefs.
Relief cannot be given unless a claim is made in accordance with the regulations and any other requirements imposed by those regulations have been met.
The regulations may specify the manner in which claims must be made and the persons who must make them.

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