Taxation of Chargeable Gains Act 1992 section 101C

Transfer within group to venture capital trust

Section 101C is an anti-avoidance provision that prevents groups of companies from exploiting the chargeable gains exemption available to venture capital trusts by transferring assets on a no gain/no loss basis to a company before it becomes a VCT.

• Where an asset is transferred within a group at no gain/no loss to a company that is not yet a venture capital trust, and that company becomes a VCT within 6 years, a deemed disposal and reacquisition at market value is triggered.
• The deemed disposal is treated as occurring immediately after the original intra-group transfer, but any resulting gain or loss is treated as accruing immediately before the company's VCT approval takes effect.
• The provision only applies if the company still owns the asset (or replacement business assets into which the gain has been rolled over) at the time of VCT approval, and has not already been subject to a deemed disposal under the degrouping or investment trust rules.
• An extended time limit allows HMRC to raise an assessment up to 6 years after the end of the accounting period in which VCT approval takes effect.