Income Tax Act 2007 section 280B

The investment limits condition

Section 280B sets out the rules for determining whether an investment made by a Venture Capital Trust (VCT) in another company breaches the permitted investment limits, taking into account annual caps, cumulative lifetime caps, and post-investment monitoring periods.

• A VCT's investment in a company breaches the permitted limits if the total annual risk capital investment in that company (including EIS, SEIS, social investment and other state aid risk finance) exceeds the annual maximum, or if the cumulative total exceeds the lifetime cap applicable at the investment date
• Higher lifetime caps apply where the investee company qualifies as a knowledge-intensive company; otherwise the standard lower cap applies
• Where a trade is acquired by or transferred into the investee company (or its 51% subsidiaries) during the five years after investment, previous risk capital investments linked to that trade are "imported" into the cumulative totals and may cause a breach
• A "relevant investment" for these purposes includes VCT investments, EIS and SEIS share subscriptions backed by compliance statements, social enterprise investments with compliance statements, and any other investment constituting approved state aid risk finance