The risk to capital condition was introduced in 2018 and aimed to clamp down on companies with activities aimed at capital preservation from issuing shares that qualify for the valuable venture capital reliefs. The condition is subjective and is open to interpretation. However, the earliest tribunal decisions indicate that a commercial approach is being adopted; for example, an initial focus upon a single project will not preclude the condition being met if this is standard within an industry. Similarly, other matters, like growing the number of employees or not, need to be considered as part of the whole picture instead of in isolation.
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The risk to capital condition was introduced in 2018 and aimed to clamp down on companies with activities aimed at capital preservation from issuing shares that qualify for the valuable venture capital reliefs. The condition is subjective and is open to interpretation. However, the earliest tribunal decisions indicate that a commercial approach is being adopted; for example, an initial focus upon a single project will not preclude the condition being met if this is standard within an industry. Similarly, other matters, like growing the number of employees or not, need to be considered as part of the whole picture instead of in isolation.
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:
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