Part 6Venture capital trusts
Chapter 4Qualifying holdings
Supplementary
F9311Power to amend Chapter
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312Winding up of the relevant company
None of the requirements of this Chapter is to be regarded, at a time when the relevant company is being wound up, as being, on that account, a requirement that is not met in relation to that company if—
a
the requirements of this Chapter would be met in relation to that company apart from the winding up, and
b
the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
312AF7Power to require information relating to disqualifying arrangements
1
Subsection (2) applies if an officer of Revenue and Customs has reason to believe that the relevant company has issued the relevant holding to the investing company in consequence of or, or otherwise in connection with, disqualifying arrangements (within the meaning of section 299A(2)).
2
The officer may by notice require any person concerned to supply the officer within such time as may be specified in the notice with—
a
a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, such arrangements exist or have existed, and
b
such other information as the officer may reasonably require for the purposes of section 299A and as that person has or can reasonably obtain.
3
The period specified in a notice under subsection (2) must be at least 60 days.
4
A “person concerned” means—
a
the relevant company,
b
the investing company,
c
any person connected with either of those companies, and
d
any person whom the officer has reason to believe is or was a party to the arrangements in question.
313Interpretation of Chapter
1
In this Chapter —
“the investing company” has the meaning given by section 286(1),
“the relevant company” has the meaning given by section 286(1), and
“the relevant holding” has the meaning given by section 286(1).
2
References in this Chapter to the issue of any securities, in relation to any security consisting in a liability in respect of an unsecured loan, have effect as references to the making of the loan.
3
References in sections 303 to 309 to a trade are to be read without regard to the definition of “trade” in section 989 (see also section 300(4)).
4
For the purposes of sections 296 and 310(3) and (4), the question whether a person controls a company is to be determined in accordance with F1sections 450 and 451 of CTA 2010 with the modification given by subsection (6).
5
For the purposes of this Chapter F8(other than section 312A), section 993 (meaning of “connected persons”) applies as if references to “control” in that section were to be read in accordance with F2sections 450 and 451 of CTA 2010 with the modification given by subsection (6).
F10But section 993 does not apply for the purposes of the definition of “independent expert” in section 331A(10).
6
The modification is that, in determining whether a person controls a company, the following are to be ignored—
a
any person's possession of, or entitlement to acquire, fixed-rate preference shares in the company that do not carry voting rights, F4...
b
any person's possession of, or entitlement to acquire, rights as a loan creditor of the companyF5, and
c
any right to dividends carried by shares in the company where the shares—
i
are eligible shares, and
ii
are held by the investing company.
7
In subsection (6) “fixed-rate preference shares” means shares which—
a
were issued wholly for new consideration,
b
do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and
c
do not carry any right to dividends other than dividends which—
i
are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and
ii
together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued,
and in paragraph (a) “new consideration” has the meaning given by F3section 1115 of CTA 2010.
F68
In subsection (6) “eligible shares” has the same meaning as in Chapter 3 (see section 285(3A) and (3B)).