The Inland Revenue has published revised versions of three existing statements of practice to reflect changes to venture capital reliefs (VCRs) introduced by the Finance Act 1998. The changes also mean that Extra-Statutory Concession ESC A76 (dealing with individuals acquiring one of two subscriber shares in a company) is no longer needed and it has therefore been withdrawn for shares issued after 5 April 1998.
The first statement of practice (SP 5/98) sets out the Revenue`s general approach in applying the "gross assets rule" for the venture capital trust (VCT) and the enterprise investment scheme (EIS).
The second statement of practice (SP 6/98) sets out the application of the rules which deny or withdraw relief to investors under the EIS, the business expansion scheme, the VCT scheme and capital gains tax reinvestment relief, where investors receive loans linked to their investments.
The third statement of practice (SP 7/98) gives the Revenue`s interpretation of the requirement that qualifying trades or activities for which money is raised through the EIS, VCT scheme or through capital gains tax reinvestment relief, should be carried out "wholly or mainly in the United Kingdom".