New rules are being introduced to restrict upfront relief, where an investor sells his shares back to the VCT and uses the proceeds to subscribe for another shareholding. In this way, one can have a series of share subscriptions, each one giving rise to tax relief, but with no fresh money actually going into the system and finding its way towards the high growth companies that the VCT scheme is intended to benefit.
Rules to restrict upfront relief in a share buyback situation were first mooted in the Consultation Paper earlier this summer. We now have some draft legislation, so it is now possible to explore in more detail, just how these new rules will apply.
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