Finance Act 2002

Value received by investor where the investment consists of securities or shares

32 (1) Where the investment consists of securities or shares and—

(a) the investor receives any value (other than insignificant value) from the CDFI during the period of restriction,

(b) the investment or a part of it is held by the investor at the time the value is received and has been held by him, as sole beneficial owner, continuously since the investment was made (“the continuing investment”),

(c) the receipt is wholly or partly in excess of the permitted level of receipts in respect of the continuing investment, and

(d) the amount of that excess (“the excess”) is not an amount of insignificant value,

any relief attributable to the continuing investment in respect of any tax year or accounting period must be withdrawn.

(2) For the purposes of sub-paragraph (1) the permitted level of receipts is exceeded where—

(a) any amount of value is received by the investor (disregarding any amounts of insignificant value) in the first three years of the period of restriction, or

(b) the aggregate amount of value received by the investor (disregarding any amounts of insignificant value)—

(i) before the beginning of the fifth year of that period, exceeds 25% of the invested capital;

(ii) before the beginning of the final year of that period, exceeds 50% of the invested capital;

(iii) before the end of that period, exceeds 75% of the invested capital.

(3) In this paragraph—

• “the invested capital”, in relation to the continuing investment, means the amount subscribed for the securities or shares concerned;

• “an amount of insignificant value” means an amount of value which—

  (a)

  does not exceed £1,000, or

  (b)

  if it exceeds that amount, is insignificant in relation to the amount subscribed by the investor for the securities or shares comprising the continuing investment;

  and for the purposes of sub-paragraph (1) the investor receives insignificant value where he receives an amount of insignificant value.

(4) This paragraph is subject to paragraph 37 (value received where there is more than one investment).

(5) Value received shall be disregarded, for the purposes of this paragraph, to the extent to which relief attributable to any loan, securities or shares in respect of any one or more tax years or accounting periods has already been reduced or withdrawn on its account.