TaxCorporate Tax‘Worrying times’ as HMRC withdraws firm’s VCT status

'Worrying times' as HMRC withdraws firm's VCT status

HMRC withdraws VCT status of a company, following breach of investment rules

HMRC has for the first time withdrawn the venture capital trust (VCT) status of a company, after Oxford Technology breached one of its investment rules.

A requirements for operating a VCT is that no more than 15% of the fund can be invested in any one company, as calculated by the last price at which that company’s shares were purchased, Accountancy Age’s sister publication Professional Adviser.

But Oxford Technology 3 VCT breached the ‘15% rule’ in August last year through its holding in immunotherapy specialist Scancell.

Oxford Technology, which is appealing the ruling, said the breach was “inadvertent” and the result of an increase in Scancell’s share price after it took up its right to purchase additional shares in the group as part of a discounted rights issue. It had first invested in the company in 1999, when it was a start-up venture.

Should Oxford’s appeal be unsuccessful, the company said it would consider its future as a listed company.

Oxford Technology VCT has also had its status withdrawn by HMRC.

Investors in both are being urged to contact their financial adviser.

The move by HMRC has been described as “very worrying” for investors in the VCTs.

Association of Investment Companies director-general Ian Sayers said: “This is a very worrying time for investors. We understand that both companies are going to appeal HMRC’s decision and so investors may want to speak to their financial advisers to understand the implications of these announcements.”

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