Corporate Venturing Scheme
The Corporate Venturing Scheme (CVS) is a tax relief scheme for companies investing a minority stake in other companies. It is similar to the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme for private individuals.
This is a simple overview of the main rules of the Corporate Venturing Scheme. Consult HMRC or your accountant for more details.
Tax Relief
For qualifying CVS investments, the investing company can reduce its end of year corporation tax bill by 20% of the investment amount.
Example: An investment of £100,000 is made in a company. Up to £20,000 can be offset against the company’s corporation tax liability at the end of its accounting year.
Qualifying Period
This is the period over which the conditions for an investment to qualify for CVS must be met. It is effectively three years from the date the investment is made and shares are issued.
Minority Investor
The investing company must not own more than 30% of the issuing company. Neither may it control the issuing company at any point during the qualifying period.
Issuing Company
The issuing company must be an unquoted company with gross assets of no more than £7 million before, and £8 million after, the investment is made.
The Investment
The investment must be in cash and for fully paid up, full risk, ordinary shares. 80% of the investment must be spent in first 12 months with remainder spent in following 12 months.
Application Process
Advanced clearance is not required. You can simply complete and send off a Corporate Venturing Scheme Compliance Statement.
Applications for Advanced Clearance
A full list of documents required can be found in the Advanced Clearance section on the HMRC website. Briefly:
- Financial accounts
- Draft agreements/contracts
- Shareholder structure
- Details of share issue and investment amount