Income Tax Act 2007 section 280

Conditions relating to qualifying holdings and eligible shares

Section 280 gives VCTs a grace period after issuing further shares, during which the proceeds of those shares are ignored when testing whether the VCT meets the 80% qualifying holdings condition and the 70% eligible shares condition.

• When a VCT that already has approval raises additional ordinary share capital, the use of those proceeds is disregarded for up to three years when assessing whether the qualifying holdings and eligible shares conditions are met.
• The grace period covers the accounting period in which the further share issue is made and any subsequent accounting period ending no more than three years after the further issue.
• The Treasury has power to make regulations that restrict or modify this grace period, including imposing conditions or requiring approvals before it can apply.
• Section 324, which governs regulation-making powers for VCT winding-up and merger provisions, also applies to regulations made under this section.