Income Tax Act 2007 section 294A

The permitted company age requirement

Section 294A sets out the maximum age a company can be and still receive qualifying VCT investment, requiring that if shares are issued after the company's initial investing period, one of three alternative conditions must be satisfied.

• A company receiving VCT investment after its initial investing period must meet one of three conditions (A, B or C) for the shares to count as a qualifying holding.
• The initial investing period is 10 years from first commercial sale for knowledge-intensive companies, or 7 years for all other companies.
• Condition A requires a previous relevant investment before the period ended, with money used for the qualifying activity; Condition B requires investment of at least 50% of average turnover within a 30-day window, used to enter a new product or geographical market; Condition C applies where Condition B was previously met for earlier investments whose proceeds were used for the qualifying activity.
• Average turnover is calculated as one fifth of total relevant turnover over the five-year period ending before the last accounts filing period (or, if that period ended more than 12 months before the investment date, the five years ending 12 months before the investment date).