13th Mar 2014 15:12
LONDON (Alliance News) - Oxford Technology VCT PLC and Oxford Technology 3 VCT PLC Thursday said they have had their status as venture capitalist trusts withdrawn by Her Majesty's Revenue and Customs, meaning they and their investors will no longer receive the attractive tax advantages previously granted.
The Association of Investment Companies, founded in 1932 to represent the interests of the investment trust industry, said HMRC's decision means this is a worrying time for investors in the two VCTs.
"We understand that both companies are going to appeal HMRC?s decision and so investors may want to speak to their financial advisers to understand the implications of these announcements," Ian Sayers, Director General of the Association of Investment Companies said in a statement.
"This is the first time that HMRC has withdrawn the status of a VCT. Although these VCTs are not members of the AIC, we will be producing a general guide on the implications of the loss of VCT status which will be available on our website shortly," Sayers added.
Under rules governing VCTs, no one investment can exceed 15% of the fund, as calculated by the last price at which that company's shares were purchased.
In 1999, Oxford Technology VCT PLC invested GBP125,000 in Scancell Holdings PLC when it was a start-up company. In December 2003 OT3VCT invested GBP150,000 in Scancell.
OT3VCT has made subsequent investments to support the growth of Scancell. Scancell has a vaccine for melanoma which is in clinical trials and is quoted on AIM.
In August 2013, OTVCT and OT3VCT took up their rights to purchase additional shares in Scancell as part of a discounted rights issue. This brought the total invested by OTVCT to GBP491,000 and the total invested by OT3VCT to GBP400,000, both being less than 10% of the total capital raised by the trusts.
However, because Scancell's share price had increased significantly, the investments breached the 15% rule.
The trusts informed HMRC in October 2013 of what they describe as the inadvertent breaches.
The trusts said they will appeal the decision.
If their appeals are unsuccessful, the directors of the trusts will have to review their options. This may result in the cancellation to the premium segment of the Official List of the United Kingdom Listing Authority and to trading on the main market for listed securities of the London Stock Exchange.
Oxford Technology VCT shares were Thursday quoted at 69.00 pence, down 1.4%.
Oxford Technology 3 VCT shares were Thursday quoted at 65.00 pence, untraded.
By Samuel Agini; [email protected]; @samuelagini
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