The tribunals appear keen to adopt an approach which is based in commercial reality, writes Andrew Rainford (Red Dragon Tax).
Risk to capital: the need for streamlining
Prior to the introduction of the risk to capital condition (RCC) there were concerns that the venture capital schemes were increasingly subject to abuse. Investments were being marketed for companies with relatively low-risk activities. Despite these companies seemingly offering little chance of capital growth or loss they could often receive approval to issue certificates under EIS/SEIS due to the prescriptive nature of the legislation.
HMRC clearly felt that the existing legislation was not effective at limiting relief in line with parliamentary intent and FA 2018 s 14 inserted the RCC for investments made via EIS SEIS or VCT on or after 15 March 2018. The respective legislation for each scheme is at ITA 2007 ss 157A 257AAA...
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The tribunals appear keen to adopt an approach which is based in commercial reality, writes Andrew Rainford (Red Dragon Tax).
Risk to capital: the need for streamlining
Prior to the introduction of the risk to capital condition (RCC) there were concerns that the venture capital schemes were increasingly subject to abuse. Investments were being marketed for companies with relatively low-risk activities. Despite these companies seemingly offering little chance of capital growth or loss they could often receive approval to issue certificates under EIS/SEIS due to the prescriptive nature of the legislation.
HMRC clearly felt that the existing legislation was not effective at limiting relief in line with parliamentary intent and FA 2018 s 14 inserted the RCC for investments made via EIS SEIS or VCT on or after 15 March 2018. The respective legislation for each scheme is at ITA 2007 ss 157A 257AAA...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
