SolvedSTSM041310 | Exemptions and reliefs: exemptions: growth market shares - recognised growth markets - how to qualify as a recognised growth market - 20% compounded annual growth test condition
From HM Revenue & Customs · Stamp Taxes on Shares Manual
A market can apply to be a recognised growth market if it is a recognised stock exchange or (with effect from 1 January 2024) a Financial Conduct Authority (FCA) regulated multilateral trading facility (MTF) and meets one of two conditions - see STSM041290.
The 20% compounded annual growth test condition (section 99A(5)(b) FA 1986)
To meet this condition, HMRC must be satisfied that the market’s rules require companies seeking admission to demonstrate at least 20% compounded annual growth over the three periods of account preceding admission in either:
gross revenue or
employment
Details of the formula for calculating whether this condition has been met can be found if you download the annual growth test formula (Document) (Chrome and Edge browser users may need to copy and paste the address into the address bar).
alternative text version of the annual growth formula as followed: (EV divided by BV) to the power of one-third, minus 1, times 100.
Definitions Table
| Term | Meaning |
|---|---|
| EV | Company’s gross revenue (or number of employees) for the last of the three pre-admission periods of account |
| BV | Company’s gross revenue (or number of employees) for the period immediately preceding the three pre-admission periods of account |
| Period of Account | The period for which the company draws up accounts |
Information on the market capitalisation condition is in STSM041300.