Income Tax Act 2007 section 279

Conditions relating to value of investments: qualifying holdings

Section 279 establishes how shares and securities acquired through certain exchanges, conversions or reorganisations are to be valued for the purposes of the VCT qualifying holdings conditions.

• When shares are exchanged under approved restructuring arrangements, the new shares inherit the last recorded value of the old shares they replace, preserving continuity for VCT qualifying holdings tests.
• When a company exercises conversion rights attached to convertible shares or securities, the new shares issued on conversion are valued at the last recorded value of the convertibles they replace.
• In both cases, references to shares include securities, and the inherited value applies both at the time of acquisition and immediately after any subsequent addition to the holding under the same arrangements.
• Regulations may also provide that, where a share exchange occurs as part of a company reorganisation, the value of both the new shares and any retained original shares is set at a level that ensures the VCT investment value conditions continue to be met.

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