ACCA Advanced Taxation (ATX) Practice Exam

When an individual sells shares in a Venture Capital Trust (VCT) within the specified holding period, this action leads to the withdrawal of any tax relief that was previously granted on the investment. In the context of VCTs, tax reliefs often include income tax relief on investments made and the potential for capital gains tax exemptions on gains earned when the shares are eventually disposed of, provided the shares are held for a minimum period.

If shares are sold before the required holding period, the tax relief that was available is effectively withdrawn. This means that the individual may have to repay any income tax relief previously claimed, which can have a significant financial impact. By selling shares too early, the investor not only loses out on the intended tax benefits but might also incur tax liabilities that could have been avoided with a longer holding period.

The remaining options would not apply since they suggest some form of retention of tax relief, which contradicts the rules governing VCTs when it comes to early disposals. Thus, the correct understanding aligns with option C, which accurately reflects the tax consequences of selling VCT shares prematurely.