Income Tax Act 2007 section 287

The maximum qualifying investment requirement

Section 287 limits the amount a venture capital trust (VCT) can invest in a company that carries on its qualifying trade through a partnership or joint venture, by capping the qualifying investment at a fraction of £1 million determined by the number of corporate members in that partnership or joint venture.

• This requirement only applies where the relevant company (or its qualifying subsidiary) is in a partnership or joint venture with at least one other company, and the qualifying trade is carried on through that arrangement.
• The maximum qualifying investment is £1 million divided by the number of companies in the partnership or joint venture — so if there are four corporate members, the limit is £250,000.
• Any shares or securities issued beyond the maximum are stripped out of the qualifying holding and the money they raised is ignored for future calculations, preventing double counting.
• The relevant period for measuring the investment runs from six months before the share issue or the start of the tax year in which the issue took place (whichever is earlier) up to and including the date of issue.