The House of Commons is to decide whether to amend the regulations on Venture Capital Trusts to prot...
The House of Commons is to decide whether to amend the regulations on Venture Capital Trusts to protect their tax privileges in cases in which a trust's holdings are subject to corporate restructuring.
Under current rules at least 70% of a VCT's investments must be made in small, higher risk trading companies and at least 30% of this in ordinary shares. After three years of declining market performance many companies held by VCTs have been restructured or taken over, which has in some cases threatened trusts' compliance with Inland Revenue rules.
When this happens, the VCT, as a minority shareholder, may not be able to sell its investment, the Inland Revenue said, but may have to exchange it for shares or securities in the purchaser or post-merger company, or for different shares or securities in the original company.
Current VCT rules mean that any shares acquired in this way do not count towards the 70% or 30% rules, even if they would have counted had the VCT subscribed for them directly.
In a communiquÃ© to VCT providers the Revenue said it is expected that the process could be completed as soon as 12 November.
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