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Octopus Investments is to takeover three venture capital trusts worth £65m from Close Investments.

The deal will see Andrew Buchanan and Kate Tidbury, who run the three Close Investments VCTs, moving to Octopus next month, where they continue the day-to-day management of their Alternative Investment Market trusts.

Mr Buchanan set up the first VCT in the mid 1990s and joined Close Investments, which is part of Close Brothers, when it purchased Rutherford Asset Management in 1997. He launched the first Close Brothers Aim VCT in 1998.

Ms Tidbury joined the Close Brothers Aim VCT management team in 2000 and is the lead manager of its inheritance tax service.

Simon Rogerson, chief executive of Octopus, said that the pair were "real flagship people" and have extensive knowledge of the small-cap industry.

He added that it is a "coup" for Octopus to get some of the most experienced people in the Aim and VCT industry and added that that the company is developing its IHT and small-cap Oeics.

Mr Rogerson said: "Mr Buchanan is the real grandad of Aim investing. He has masses of experience and has worked in small caps for about 35 years. Ms Tidbury is another of the most experienced Aim managers. It is great that we are able to consolidate the number of assets under management."

Octopus already manages 15 trusts worth about £250m in addition to the three Close VCTs, which are worth £65m.

Meanwhile HM Revenue & Customs may be liable to make repayments of millions of pounds following its acceptance that fund management of VCTs should have been exempt from VAT since January 1990.

HMRC maintained that fund management of closed-ended investment vehicles – such as investment trust companies and VCTs – should be subject to VAT. However, last year the European Court of Justice ruled that fund management should be exempt in a case involving investment trust companies.

Its judgment suggested that other collective investment schemes should also benefit from exempt fund management.

Debbie Jennings, VAT director for accountancy firm PKF, said: “Any fund manager which has charged VAT to VCTs on fund management can now reclaim that VAT. Claims against the HMRC can normally only be made by fund managers, but VCTs should be able to then claim a refund from their fund manager.”

HMRC said the VAT exemption for fund management services would be amended with effect from 1 October 2008.