Income Tax Act 2007 section 326A

Certain requirements of Chapter 3 to be treated as met

Section 326A ensures that when shares in a Venture Capital Trust (VCT) are exchanged for shares in a new company under approved arrangements, key VCT approval conditions that were satisfied by the old shares carry across to the new shares, so the new parent company can retain its VCT status.

• When old shares that meet the investment limits, permitted maximum age, or no business acquisition conditions are exchanged for new shares, those conditions are treated as met to the same extent for the matching new shares.
• If the exchange takes place within five years of the old shares being issued and the old shares fall within the investment limits provision in section 280B(2)(c), that provision is treated as applying equally to the new shares.
• For the purposes of testing whether the investment limits and permitted maximum age conditions are met in relation to the old shares, the new company is treated as though it were the original relevant company — so subsidiaries acquired by the new company, investments made in it, and its turnover are all taken into account.
• The no business acquisition condition is treated as met for the old shares provided it would be met if references to the relevant company in section 280D(2) included the new company.