SCHEDULE 15 The corporate venturing scheme
Part VI Withdrawal of investment relief
Disposal of shares
46
(1)
This paragraph applies where—
(a)
the investing company disposes of any of the relevant shares which have been held by it continuously from the time they were issued until the disposal,
(b)
the disposal takes place during the qualification period relating to the relevant shares, and
(c)
investment relief is attributable to the shares.
(2)
If the disposal is not—
(a)
by way of a bargain made at arm’s length for full consideration,
(b)
by way of a distribution in the course of dissolving or winding up the issuing company,
(c)
a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset), or
(d)
a deemed disposal under section 24(2) of that Act (claim that value of asset has become negligible),
the investment relief attributable to those shares must be withdrawn.
(3)
If the disposal is within paragraph (a), (b), (c) or (d) of sub-paragraph (2) the investment relief attributable to those shares must—
(a)
if it is greater than an amount equal to 20% of the amount or value of the consideration (if any) which the company receives for the shares, be reduced by that amount, and
(b)
in any other case, be withdrawn.
(4)
Where—
(a)
the amount of the reduction (“A”) in the investing company’s liability to corporation tax obtained under paragraph 39 (form of investment relief) in respect of the relevant shares, is less than
(b)
the amount (“B”) which is equal to 20% of the amount subscribed by the investing company for those shares,
sub-paragraph (3)(a) shall have effect in relation to a disposal of any of those shares as if the amount or value referred to in that sub-paragraph were reduced by multiplying it by the fraction—
(5)
Where the amount of investment relief attributable to any of the relevant shares has been reduced before the investment relief was obtained, the amount of the corporation tax reduction obtained in respect of those shares shall be deemed for the purposes of sub-paragraph (4) to be the amount of the corporation tax reduction that would have been obtained had no such reduction of relief been made before the relief was obtained.
(6)
Sub-paragraph (5) does not apply to a reduction by virtue of paragraph 45(4) (attribution of investment relief where there is a corresponding issue of bonus shares).