Income Tax Act 2007 section 280D

The no business acquisition condition

Section 280D sets out the no business acquisition condition, which prevents a VCT from investing in a company that then uses the money to acquire an existing business, trade, or related assets.

• The condition applies to all investments made by a VCT, whether or not the holding is a qualifying holding
• Money raised by a VCT investment must not be used to acquire an existing trade, a company carrying on a trade, or intangible assets or goodwill previously employed in a trade
• Buying plant and machinery for the investee company's own trade is permitted, as is commissioning the creation of new intangible assets such as a website, provided this is not part of wider arrangements to acquire a trade
• The Treasury has power to make regulations exempting certain types of intangible asset acquisition from the prohibition