Citation, commencement and effect

1. —(1) These Regulations may be cited as the Venture Capital Trust (Winding up and Mergers) (Tax) (Amendment) Regulations 2011 and shall come into force on 6th April 2011.

(2) These Regulations have effect as follows—

(a) regulations 4 to 7 have effect in relation to any VCT-in-liquidation whose winding-up commences on or after 6th April 2011;

(b) regulations 8 to 11 have effect in relation to any merger where the transactions bringing the merger into effect take place on or after 6th April 2011; and

(c) regulation 12 has effect in relation to shares issued on or after 6th April 2011.

Amendment of the Venture Capital Trust (Winding up and Mergers) (Tax) Regulations 2004

2.The Venture Capital Trust (Winding up and Mergers) (Tax) Regulations 2004( 2 ) are amended in accordance with these Regulations.

Amendment of regulation 2

3. —(1) Regulation 2 (interpretation) is amended as follows.

(2) For paragraphs (1) to (4) substitute—

“ (1) In these Regulations, references to provisions of an Act or to Parts of an Act are to provisions or Parts of the Income Tax Act 2007 unless otherwise stated.

(2) In these Regulations—

“the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

“market value” shall be construed in accordance with sections 272 and 273 of the Taxation of Chargeable Gains Act 1992 ( 3 ) ;

“the 1992 Act” means the Taxation of Chargeable Gains Act 1992;

“prescribed winding-up period”, in relation to a VCT-in-liquidation, means the period—

“qualifying holdings” shall be construed in accordance with Chapter 4 of Part 6;

“securities”, except in regulation 12, has the same meaning as in section 285(2);

“statement of affairs” means a statement as to the affairs of a company, in the form prescribed under and complying with section 99 or 131 of the Insolvency Act 1986 ( 4 ) ;

“the 15% test” means the 15% holding limit condition specified in the table in section 274(2) and as provided for in sections 275 to 279;

“the 70% tests” means the conditions specified in the last two entries in the table in section 274(2) and as provided for in sections 275, 278, 280 and 280A ( 5 ) ;

“the 30% test” means the condition which was specified in the table at section 274(2) and as provided for in sections 275, 278 and 280, ignoring the amendments made to section 274(2) by paragraph 2(2)(b) and (c) of Schedule 2 to the Finance (No. 3) Act 2010 ( 6 ) .

(3) In regulations 9 to 14 and in this paragraph—

a “section 323(1) merger” means a merger described in section 323(1);

a “section 323(2) merger” means a merger described in section 323(2);

“share for business transfer” means an issue of shares as mentioned in section 323(1)(b)(ii) or 323(2)(b)(ii), as the case may be;

“share for share exchange” means an exchange of shares as mentioned in section 323(1)(b)(i) or 323(2)(b)(i), as the case may be;

“shares issued to effect the merger” means—

“shares issued for new consideration” means shares in the successor company issued in the period during which the merger takes place for a consideration other than as mentioned in section 323(1)(b) or 323(2)(b).

(4)Section 319(3) (references in sections 314 to 318 to things done by a VCT-in-liquidation to include things done by the liquidator of a VCT-in-liquidation) shall apply for the purposes of regulations 3 to 8 as it applies to Chapter 5 of Part 6. ” .

Amendment of regulation 3

4. In paragraph (2)(a) of regulation 3 (winding-up of venture capital trusts), for “section 842AA(5A)(a) and (b)” substitute “section 280(1)(a) and (b)”.

Amendment of regulation 4

5. In regulation 4, for “paragraph 3(9) of Schedule 15B” substitute “section 268”.

Amendment of regulation 6

6. In paragraphs (2)(a) and (3)(b) of regulation 6, for “section 842AA(2)” substitute “section 274”.

Amendment of regulation 8

7. In paragraph (3) of regulation 8 (transfer of investments in specie from a VCT-in-liquidation to a venture capital trust), for “paragraphs 1(2)(b) and 6 to 8 of Schedule 28B” substitute “sections 286(2)(b), 287, 293, 294, 297 and 331(2) and (3)”.

Amendment of regulation 9

8. In regulation 9 (mergers of venture capital trusts)—

(1) in each place where it appears—

(a) for “paragraph 10(1) merger” substitute “section 323(1) merger”, and

(b) for “paragraph 10(2) merger” substitute “section 323(2) merger”.

(2) In paragraph(3)(f) for “paragraph 10(1)(b)(ii) or 10(2)(b)(ii) of Schedule 33” substitute “section 323(1)(b)(ii) or section 323(2)(b)(ii)”.

Amendment of regulation 11

9. In regulation 11, for “Part 1 of Schedule 15B” substitute “Chapter 2 of Part 6” and for “that Schedule” substitute “that Chapter”.

Amendment of regulation 12

10. In paragraph (1) of regulation 12—

(a) for “70% test” substitute “70% tests”,

(b) for “section 842AA(2)(a)” substitute “section 274(2)”,

(c) for “Schedule 28B” substitute “Chapter 4 of Part 6”, and

(d) for “section 842AA(5B)” substitute “section 280(2)”.

Amendment of regulation 13

11. —(1) Regulation 13 is amended as follows.

(2) In paragraph (3)—

(a) for “Schedule 15B”, the first time it appears, substitute “Chapter 2 of Part 6”; and

(b) for “Part 1 of Schedule 15B” in sub-paragraph (b), substitute “Chapter 2 of Part 6”.

(3) In paragraph (5), for “any of the paragraphs of Schedule 28B (except paragraph 9)” substitute “Chapter 4 of Part 6 (except section 296(1) and (2))”.

(4) In paragraph (6)—

(a) for “paragraph 9 of Schedule 28B” substitute “section 296(1) and (2)”; and

(b) in sub-paragraph (b) for “that paragraph” substitute “that section”.

(5) In paragraph (7), for “section 842AA(2)(b) to (d)” substitute “section 274(2)” and for “in accordance with subsection (5) of that section” substitute “in accordance with that section”.

(6) In paragraph (8)—

(a) for “paragraph 10B of Schedule 28B” and (in the parentheses) “paragraph 10B” substitute “section 289”, and

(b) for “section 842AA(5)” substitute “section 278(1) to (3)”.

(7) In paragraph (9)—

(a) for “section 842AA(4)” substitute “section 275(1) to (3)”,

(b) for “section 842AA” substitute “section 281”,

(c) for “subsection (7)” substitute “subsection (2)”, and

(d) for “subsections (8) and (9)”, in both places where it occurs, substitute “subsections (3) and (4)”.

Amendment of regulation 14

12. —(1)Regulation 14 (limiting the operation of section 842AA(5B)) is amended as follows.

(2) For the heading before the regulation substitute “Limiting the operation of section 280”.

(3) In paragraph (1), for “section 842AA(5B)” substitute “section 280(2)” and for “(5A)” substitute “(1)”.

(4) In paragraph (4), for “section 842AA(5B)” substitute “section 280(2)”.

(5) In paragraph (5), for “section 842AA(2)(b) and (c)” substitute “section 274”.

(6) In paragraphs (1) and (5), for “70% test” substitute “70% tests”.

Substitution of references to “Board” for references to “Commissioners”

13. —(1) Substitute “Commissioners” for “Board” in each place in which the word appears in the following.

(2) Regulation 3(1), 9(1), 9(3) (twice), 10(1) (four times), 10(2), 10(3) (three times), 10(4) (twice), 10(5), 14(2)(b)(i) and in the heading immediately before regulation 10.