Income Tax Act 2007 section 292

Ceasing to meet requirements because of administration or receivership

Section 292 protects a company's qualifying status for VCT purposes when it enters administration or receivership, ensuring that the trading requirement and qualifying activity requirement are not treated as breached solely because of actions arising from that insolvency process.

• A company does not lose its compliance with the trading requirement (section 290) or the qualifying activity requirement (section 291) just because of actions taken as a consequence of administration or receivership.
• This protection only applies if the entry into administration or receivership was for genuine commercial reasons.
• Everything done as a consequence of the company being in administration or receivership must also be for genuine commercial reasons.
• The protection is lost if the administration, receivership, or any consequential actions form part of a scheme or arrangement whose main purpose, or one of whose main purposes, is the avoidance of tax.