The Directors intend to conduct the affairs of the Company so that it satisfies the conditions for approval as a VCT and that such approval will be maintained. The Inland Revenue has granted the Company provisional approval under Section 842AA ICTA as a VCT. The Company intends to comply with Section 842AA ICTA. Until such time as the Company has obtained approval as a VCT from the Inland Revenue, it will not control the companies in which it invests in such a way as to render them subsidiary undertakings.

The following is a general guide to the taxation position of investors. It does not set out any of the legislative provisions in full and investors should seek their own independent taxation advice.

Tax Relief for Investors

The tax relief’s set out below are available to UK residents aged 18 or over who invest in shares in the VCT. There is no specific limit on the amount an individual can invest in the VCT, but tax relief’s will only be given to the extent that the total of an individual’s subscription or other acquisitions of shares in VCTs in any tax year does not exceed £200,000. Investors who intend to invest more than £200,000 in VCTs in any one tax year should take independent advice.

Whilst Qualifying Subscribers must hold their Shares for at least five years to retain the initial income tax relief, Shareholders are able to sell their Shares at any time through the London Stock Exchange.

Income Tax

a) Relief on subscription

An investor subscribing for shares in the VCT will be entitled to claim income tax relief on amounts subscribed up to a maximum of £200,000 in any tax year. The relief is given at the rate of up to 30% on the amount subscribed.

b) Dividend Relief

An investor who acquires, in any tax year, VCT shares up to a maximum of £200,000, will not be liable to income tax on dividends paid by the VCT on those shares.

c) Withdrawal of relief

Relief from all or some of income tax on subscription for shares in a VCT is withdrawn if the shares are disposed of (other than between spouses) within five years of issue or if the VCT loses its approval within this period.

Capital Gains Tax

a) Relief from capital gains tax on the disposal of shares

Any gains made on shares held within a VCT are not subject to capital gains tax (subject to a maximum investment of £200,000 in any one tax year). Similarly, any losses on shares held within a VCT will not be treated as an allowable loss. Both of the above apply to the extent that the shares have been acquired within the limit of £200,000 for any tax year.

b) Purchasers in the market

An individual purchaser of existing shares in the market will be entitled to claim relief from capital gains tax on disposal (as described in paragraph (a) above).

c) Withdrawal of Relief

If a VCT, which has been granted approval subsequently, fails to comply with the conditions for approval, any gains on the shares after the date on which loss of VCT status takes effect will be taxable. Where VCT status is treated as never having been given, all gains are taxable.

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