VCM54120 - VCT: VCT approval: 70% qualifying holdings condition: disregard of disposals: qualifying holdings received
ITA07/S280A
A new qualifying holding for the purpose of S280A is a holding that itself forms part of the VCT鈥檚 qualifying holdings at the time that it is acquired. The most usual examples will be shares or securities acquired in share exchanges or reorganisations.
If new qualifying holdings are received as part of the consideration for the disposal of a qualifying holding, the proportion of the holding treated as retained under S280A(2)(a) is calculated using the formula:
(TC- NQH) 梅 TC
Where
- TC is the market value (at the time of the disposal) of the total consideration for the disposal, and
- NQH is the market value (at that time) of the new qualifying holdings.
Disposal of qualifying holding - consideration received includes new qualifying holdings
Example
A VCT with full approval has qualifying holdings of 拢1.5尘 and total investments of 拢2m. Its qualifying holdings are therefore 75% by value of its total investments.
On 31 July 2008 it disposes of a qualifying holding that it has held for more than 6 months. The holding was previously valued at 拢200,000 and is disposed of for consideration valued at 拢250,000 comprising 拢200,000 in cash and 拢50,000 in shares that will be qualifying holdings in the hands of the VCT.
| - | Qualifying Holdings(QI) | Total Investments (TI) | QI/TI x 100% |
|---|---|---|---|
| Before disposal | 拢1.5尘 | 拢2.0 | 75% |
Disposal: 10 April 2007
Original cost: 拢200,000
Total Proceeds: 拢250,000
Proceeds comprise:
- 拢200,000 in cash (monetary), and
- 拢50,000 in qualifying shares (non-monetary).
After disposal
| - | Qualifying Holdings(QI) | Total Investments (TI) | QI/TI x 100% |
|---|---|---|---|
| Before the application of S280A | 拢1.35尘 | 拢2.05尘 | 66% |