Income Tax Act 2007 section 274

Requirements for the giving of approval

Section 274 sets out the conditions a company must satisfy before HMRC can approve it as a Venture Capital Trust (VCT), covering requirements for its most recent complete accounting period and its current accounting period at the time of application.

• A company seeking VCT approval must meet a series of conditions for both its most recent complete accounting period and the period current at the time of application, including that its shares are traded on a regulated market and its income derives wholly or mainly from shares or securities.
• The VCT must not retain more than 15% of its investment income, must not hold more than 15% of its investments in any single company, must have at least 80% of its investments in qualifying holdings, and at least 70% of those qualifying holdings must be in eligible shares.
• Certain types of readily realisable investments — such as units in funds redeemable on seven days' notice, shares acquired on a regulated market, cash, and short-notice deposits — are excluded from the restrictions on non-qualifying investments, investment limits, maximum age limits, and business acquisition prohibitions.
• The Treasury has the power to amend by regulations the listing condition, the list of permitted non-qualifying investments, the definition of regulated market, and to introduce holding period restrictions on those permitted investments.