13 March 2014
Oxford Technology 3 VCT PLC
(the "Company" or "OT3VCT")
VCT approval withdrawn
On 10 March 2014, Oxford Technology 3 VCT PLC received notice that Her Majesty's Revenue and Customs ("HMRC") had withdrawn VCT approval for the Company effective from 7 March 2014.
One of the requirements for operating a VCT is that no more than 15% of the fund can be invested in any one company, as calculated by the last price at which that company's shares were purchased ("15% Rule").
In 1999, Oxford Technology VCT PLC invested in Scancell Holdings Plc ("Scancell") when it was a start-up company. In December 2003, by which time some progress had been made within the company, OT3VCT invested £150,000 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, OT3VCT took up its rights to purchase additional shares in Scancell as part of a discounted rights issue. This brought the total invested by OT3VCT to £400,000, being less than 10% of the total capital raised by OT3VCT. However, because Scancell's share price had increased significantly, this investment resulted in a breach of the 15% Rule.
Upon realising this in October 2013, OT3VCT notified HMRC of the inadvertent breach. HMRC has now considered the case and decided to withdraw VCT approval, effective from 7 March 2014.
HMRC have notified the VCT that the effects of the withdrawal are as follows:
From the date of withdrawal, being 7 March 2014, the tax advantages of approval for the Company and its investors will no longer apply.
For the Company:
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its exemption from Corporation Tax on chargeable gains is lost.
For investors in the Company:
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any 'front end' income tax relief in shares issued within a period of 5 years prior to this notice will be withdrawn;
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any deferred gains come to charge;
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subsequent dividends from the Company will not be exempt from income tax;
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any subsequent gains on disposal of shares in the Company will not be exempt from Capital Gains Tax.
Oxford Technology 3 VCT PLC intends to appeal against this decision and has 30 days in which to do so.
In the event that the appeal is not successful the directors of the Company ("Directors") will need carefully to review the Company's options and consider its future as a listed company which may lead to a cancellation of admission 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 plc.
Given the matters set out above, before dealing in the Company's shares, shareholders and any potential investors should seek their own personal financial advice from their stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser who specialises in advising on the acquisition or disposal of shares in order that they may ascertain the implications associated with the Company losing its VCT approval.
The Company will keep shareholders informed of further developments and intends to write to existing shareholders setting out the taxation implications in more detail.
For further information please contact:
Lucius Cary, Oxford Technology Management - lucius@oxfordtechnology.com