Income Tax Act 2007

[F1 292A The maximum amount raised annually through risk [F2 finance investments] requirement U.K.

(1) The total amount of relevant investments made in the relevant company in the year ending with the date the relevant holding is issued [F3 must not exceed—

(a) if the company is a knowledge-intensive company at that date (see section 331A and subsection (6A)), £10 million, and

(b) in any other case, £5 million.]

[F4 (2) In subsection (1), the reference to relevant investments made in the relevant company includes—

(a) relevant investments made in any company that has at any time in the year mentioned there been a 51% subsidiary of the relevant company (including investments made in such a company before it became such a subsidiary but, if it was not a subsidiary at the end of that year, not those made after it last ceased to be such a subsidiary),

(b) any other relevant investment made in a company to the extent that the money raised by the investment has been employed for the purposes of a trade carried on by another company that has at any time in that year been a 51% subsidiary of the relevant company (but, if it is not such a subsidiary at the end of that year, ignoring any money so employed after it last ceased to be such a subsidiary), and

(c) any other relevant investment made in a company if—

(i) the money raised by the investment has been employed for the purposes of a trade carried on by that company or another person, and

(ii) in that year, after that investment was made, the trade (or a part of it) became a relevant transferred trade (see subsection (2B)).

(2A) If only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a relevant transferred trade, the reference in subsection (2)(c) to the relevant investment is to be read as a reference to the corresponding proportion of that investment.

(2B) Where—

(a) in the year mentioned in subsection (1) a trade is transferred—

(i) to the relevant company,

(ii) to a company that is, or has at any time during that year been, a 51% subsidiary of the relevant company, or

(iii) to a partnership of which a company within sub-paragraph (i) or (ii) is a member,

(including where it is transferred to a company within sub-paragraph (ii), or a partnership of which such a company is a member, at a time in the year before the company became such a subsidiary but not where it is transferred to such a company or partnership in that year after the company last ceased to be such a subsidiary), and

(b) that trade or a part of it was previously (at any time) carried on by another person,

the trade or part mentioned in paragraph (b) becomes a “ relevant transferred trade ” at the time it is transferred as mentioned in paragraph (a).]

(3) A “relevant investment” is made in a company if—

(a) an investment (of any kind) in the company is made by a VCT, or

(b) the company issues shares (money having been subscribed for them), and (at any time) the company provides—

(i) a compliance statement under section 205 (enterprise investment scheme), or

[F5 (ia) a compliance statement under section 257ED (seed enterprise investment scheme).]

F6 (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

in respect of the shares, or

[F7 (ba) an investment is made in the company and (at any time) the company provides a compliance statement under section 257PB (tax relief for social investments) in respect of the investment, or]

(c) any other investment is made in the company which is aid received by it pursuant to a measure approved by the European Commission [F8 before IP completion day] as compatible with Article 107 of the Treaty on the Functioning of the European Union in accordance with the principles laid down in the [F9 European Commission's Guidelines on State aid to promote risk finance investment] [F10 (as those guidelines had effect at the time of the approval)].

(4) For the purposes of subsections (1) [F11 to (2B)], an investment within subsection (3)(b) is regarded as made when the shares are issued.

[F12 (4A) Section 257KB applies in determining for those purposes when an investment within subsection (3)(ba) is made as it applies for the purposes of Part 5B (tax relief on social investments).]

(5) Subsection (6) applies if, by virtue of the provision of a compliance statement under section 205 [F13 , 257ED or 257PB] above F14 ..., the requirement of this section is not met.

(6) The requirement is to be treated as having been met throughout the period—

(a) beginning with the time the relevant holding was issued, and

(b) ending with the time the compliance statement was provided.

[F15 (6A) If the relevant company began to carry on a trade less than three years before the date the relevant holding is issued, section 331A as it applies for the purposes of this section has effect with the substitution of the following subsections for subsections (3) to (5A)—

“(3) The first operating costs condition is that in at least one of the relevant three succeeding years at least 15% of the relevant operating costs constitute expenditure on research and development or innovation.

(4) The second operating costs condition is that in each of the relevant three succeeding years at least 10% of the relevant operating costs constitute such expenditure.

(5) In subsections (3) and (4)—

• “relevant operating costs” means—

  (a)

  if the relevant company is a single company at the applicable time, the operating costs of that company, and

  (b)

  if the relevant company is a parent company at the applicable time, the sum of—

  (i)

  the operating costs of the relevant company, and

  (ii)

  the operating costs of each company which is a qualifying subsidiary of the relevant company at that time, excluding a company's operating costs for any of the relevant three succeeding years during any part of which the company is not a qualifying subsidiary of the relevant company;

• “the relevant three succeeding years” means the three consecutive years the first of which begins with the date the relevant holding is issued.”]

[F16 (7) Section 280B(8) and (9) (meaning of “trade” etc) applies for the purposes of this section as it applies for the purposes of section 280B.]]

Textual Amendments

F1 S. 292A inserted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 16 para. 6(3) (with Sch. 16 paras. 6(5)(6), 8)

F2 Words in s. 292A heading substituted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(8)

F3 Words in s. 292A(1) substituted (6.4.2018) by Finance Act 2018 (c. 3), Sch. 4 paras. 3(2), 10; S.I. 2018/931, reg. 3(b)

F4 S. 292A(2)-(2B) substituted for s. 292A(2) (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(2)

F5 S. 292A(3)(b)(ia) inserted (17.7.2012) (with effect in accordance with Sch. 6 para. 24(1)(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 6 para. 16

F6 S. 292A(3)(b)(ii) omitted (17.7.2012) (with effect in accordance with Sch. 8 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 8 para. 6(3)(a)

F7 S. 292A(3)(ba) inserted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(3)(a)

F8 Words in s. 292A(3)(c) inserted (31.12.2020) by The Taxes (State Aid) (Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1499), regs. 1, 4(11)(a)

F9 Words in s. 292A(3)(c) substituted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(3)(b)

F10 Words in s. 292A(3)(c) substituted (31.12.2020) by The Taxes (State Aid) (Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1499), regs. 1, 4(11)(b)

F11 Words in s. 292A(4) substituted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(4)

F12 S. 292A(4A) inserted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(5)

F13 Words in s. 292A(5) inserted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(6)

F14 Words in s. 292A(5) omitted (17.7.2012) (with effect in accordance with Sch. 8 para. 19 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 8 para. 6(4)

F15 S. 292A(6A) inserted (6.4.2018) by Finance Act 2018 (c. 3), Sch. 4 paras. 3(3), 10; S.I. 2018/931, reg. 3(b)

F16 S. 292A(7) inserted (with effect in accordance with Sch. 6 para. 23(3) of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 7(7)