VCTs Await Clarification From HMRC On UK Finance Bill Implications

LONDON (Alliance News) - A number of venture capitalist trusts Tuesday said they will postpone the allotment of some shares while they await clarification from HM Revenue & Customs over the tax implications of the UK government's 2014 Finance Bill.

British Smaller Companies VCT PLC, British Smaller Companies VCT2 PLC, Downing ONE VCT PLC, Downing THREE VCT PLC, Mobeus Income & Growth VCT PLC, Mobeus Income & Growth 2 VCT PLC, Mobeus Income & Growth 4 VCT PLC, and The Income & Growth VCT PLC all responded to the changes.

On January 14, British Smaller Companies VCT and British Smaller Companies VCT2 PLC issued a prospectus and circulars relating to joint offers for subscription to raise up to GBP30.0 million. The companies said that until clarification around the Finance Bill is received from HMRC, their advisers have suggested the postponement of the allotment of shares for the 2014-15 tax year applied for under those offers.

British Smaller Companies VCT 2 also said it has postponed the 2.5 pence per share final dividend announced on March 28 because of the share allotment explanation delay. The VCT said it wants to ensure its new shareholders receive the dividend.

The British Smaller Companies VCTs said they have been advised of "some ambiguity" around the drafting of certain of the provisions relating to VCTs. Depending on interpretation, that could spell danger for the VCT investors' tax reliefs for allotments taking place after April 5, according to the VCTs' advisers.

The Downing VCTs said they are awaiting clarification over "regulations [...] in connection with dividends." They said HMRC has indicated that it will make some amendments to the draft Finance Bill, while the British Smaller Companies said they expect the issue to be resolved in May and hope the allotment can take place around the end of that month.

In addition, Mobeus Income & Growth VCT, Mobeus Income & Growth 2 VCT, Mobeus Income & Growth 4 VCT, and The Income & Growth VCT had launched an offer for subscription to raise GBP24.0 million, subsequently increased to GBP34.0 million on November 28. Of that sum, GBP30.5 million has been allotted. The companies said the delay in accepting and allotting the shares was a result of the Finance Bill.

"The companies, along with others in the VCT industry, are currently seeking legal and tax advice in respect of the implications of this proposed legislation," the companies said in a statement.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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