SCHEDULES
C2C3SCHEDULE 28B Venture Capital Trusts: Meaning of “qualifying holdings”
Sch. 28B modified (17.9.2004 with effect in accordance with reg. 1(2)(b) of the modifying S.I.) by The Venture Capital Trust (Winding up and Mergers) (Tax) Regulations 2004 (S.I. 2004/2199), regs. 1(1), 13(5)(6)(8)
Requirements as to the money raised by the investment in question
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F31
The requirements of this paragraph are that either—
a
at least 80% of the money raised by the issue of the relevant holding must—
i
have been employed wholly for the purposes of the trade by reference to which the requirements of paragraph 3(3) above are satisfied; or
ii
be money which F4is intended to be employed wholly for the purposes of that trade; or
b
all of the money so raised must have been employed as mentioned in paragraph (a)(i) above.
2
For the purposes of this Schedule—
a
the requirements of sub-paragraph (1) above shall not be capable of being satisfied by virtue of paragraph (a)(ii) of that sub-paragraph at any time after 12 months have expired from the trading time, and
b
the requirements of that sub-paragraph shall not be capable of being satisfied by virtue of paragraph (a)(i) of that sub-paragraph at any time after 24 months have expired from the trading time.
2AA
In sub-paragraph (2) above, “the trading time” means whichever is applicable of the following—
a
in a case where the requirements of sub-paragraph (3) of paragraph 3 above were satisfied in relation to the time when the relevant holding was issued by virtue of paragraph (a) of that sub-paragraph, that time; and
b
in a case where they were satisfied in relation to that time by virtue of paragraph (b) of that sub-paragraph, the time when F5the condition in paragraph 3(4)(a) above was satisfied.
F1F62AB
The requirements of this paragraph are not satisfied if either of the following, namely—
a
the trade by reference to which the requirements of paragraph 3(3) above are satisfied, and
b
any preparations for that trade falling within paragraph 3(3)(b) above,
are carried on, at any time after the issue of the relevant holding, by a person other than the relevant company or a relevant qualifying subsidiary of that company.
2AC
Sub-paragraph (2AD) below applies where preparations mentioned in sub-paragraph (2AB)(b) above are carried on by the relevant company or a relevant qualifying subsidiary of that company at any time after the issue of the relevant holding.
2AD
Where this sub-paragraph applies, the requirements of this paragraph are not to be regarded, by virtue of sub-paragraph (2AB) above, as failing to be satisfied by reason only of the carrying on of the trade mentioned in sub-paragraph (2AB)(a) above by a person other than—
a
the relevant company, or
b
a qualifying subsidiary of that company,
at any time after the issue of the relevant holding but before the relevant company or any relevant qualifying subsidiary of that company carries on that trade.
2AE
The requirements of this paragraph are not to be regarded, by virtue of sub-paragraph (2AB) above, as failing to be satisfied by reason only of the carrying on of the trade mentioned in sub-paragraph (2AB)(a) above—
a
by the partners in a partnership of which the relevant company, or a relevant qualifying subsidiary of that company, is a member, or
b
by the parties to a joint venture to which the relevant company, or a relevant qualifying subsidiary of that company, is a party.
2AF
The requirements of this paragraph are not to be regarded, by virtue of sub-paragraph (2AB) above, as failing to be satisfied if—
a
by reason only of anything done as a consequence of the relevant company or any other company being in administration or receivership, or
b
by reason only of the relevant company or any other company being wound up or dissolved without winding up,
the trade mentioned in sub-paragraph (2AB)(a) above ceases to be carried on by the relevant company or a relevant qualifying subsidiary of that company and is subsequently carried on by a person who has not been connected, at any time after the date which is one year before the issue of the relevant holding, with the relevant company.
2AG
Sub-paragraph (2AF) above applies only if (as the case may be)—
a
the entry into administration or receivership and everything done as a consequence of the company concerned being in administration or receivership, or
b
the winding up or dissolution,
is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose of which or one of the main purposes of which is the avoidance of tax.
2AH
Sub-paragraph (2) of paragraph 11A below applies for the purposes of sub-paragraphs (2AF) and (2AG) above as it applies for the purpose of that paragraph.
3
For the purposes of this paragraph money shall not be treated as employed otherwise than wholly for the purposes of a trade if the only amount employed for other purposes is an amount which is not a significant amount; and nothing in paragraph 1(3) above shall require any money whose use is disregarded by virtue of this sub-paragraph to be treated as raised by a different holding.
4
References in this paragraph to employing money for the purposes of a trade shall include references to employing it for the purpose of preparing for the carrying on of the trade.
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Sch. 28B applied (17.9.2004 with effect in accordance with reg. 1(2)(b) of the affecting S.I.) by The Venture Capital Trust (Winding up and Mergers) (Tax) Regulations 2004 (S.I. 2004/2199), regs. 1(1), 12(1)