(1) A requirement of this section is that—
(a) less than two years has passed since the trading time, or
(b) at least two years has passed since the trading time and all of the money raised by the issue of the relevant holding has been employed wholly for the purposes of a relevant qualifying activity.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In subsection (1) “the trading time” means whichever is applicable of the following—
(a) in a case where the requirement of section 291 was met in relation to the time when the relevant holding was issued and the relevant qualifying activity falls within subsection (2) of that section, the time when the relevant holding was issued, and
(b) in a case where that requirement was met in relation to that time and the relevant qualifying activity falls within subsection (3) of that section, the time when the condition in subsection (4)(a) of that section was met by a qualifying company beginning to carry on the intended trade.
(5ZA) Employing money raised by the issue of the relevant holding (whether on its own or together with other money) on the acquisition, directly or indirectly, of—
(a) an interest in another company such that a company becomes a 51% subsidiary of the relevant company,
(b) a further interest in a company which is a 51% subsidiary of the relevant company,
(c) a trade,
(d) intangible assets employed for the purposes of a trade, or
(e) goodwill employed for the purposes of a trade,
does not amount to employing the money for the purposes of a relevant qualifying activity.
(5ZB) The Treasury may by regulations provide that subsection (5ZA) does not apply in relation to acquisitions of intangible assets which are of a description specified, or which occur in circumstances specified, in the regulations.
(5ZC) For the purposes of subsections (5ZA) and (5ZB)—
“goodwill” has the same meaning as in Part 8 of CTA 2009 (see section 715(3));
“intangible assets” means any asset which falls to be treated as an intangible asset in accordance with generally accepted accountancy practice;
and section 280B(8) and (9) (meaning of “trade” etc) applies for the purposes of this section as it applies for the purposes of section 280B.
(5A) Also, otherwise employing money on the acquisition of shares in a company does not of itself amount to employing the money for the purposes of a relevant qualifying activity.
(5B) Another requirement of this section is that, of the money raised by the issue of the relevant holding, only such part of that money as could have been raised by an issue of shares and securities falling within subsection (5C) is employed for the purposes of a qualifying business activity that is carried on by one or more specified Northern Ireland companies.
(5C) Shares and securities fall within this subsection if the requirements in section 286(2) as they apply in relation to a relevant company that is a specified Northern Ireland company are met in respect of them.
(6) For the purposes of this section money is not to be treated as employed otherwise than wholly for the purposes of a relevant qualifying activity if the only amount employed for other purposes is an amount which is not a significant amount.
(7) Nothing in section 286(5) requires any money whose use is ignored by virtue of subsection (6) to be treated as raised by a different holding.
(8) In this section—
“qualifying activity” and “qualifying company” have the same meaning as in section 291, and
a qualifying activity is a “relevant qualifying activity” if—
it was also a qualifying activity at the time when the relevant holding was issued, or
it is a qualifying trade and preparing to carry it on was a qualifying activity at that time.
294 The relevant company to carry on the relevant qualifying activity requirement
(1) The requirement of this section is met if, at no time after the issue of the relevant holding, has the relevant qualifying activity in question been carried on by a person other than—
(a) the relevant company, or
(b) a qualifying 90% subsidiary of that company.
In this subsection “the relevant qualifying activity in question” means the relevant qualifying activity by reference to which the requirement of section 293 is met.
(2) The requirement of this section is not to be regarded as failing to be met merely because of the carrying on of the trade in question by a person other than the relevant company, or a qualifying subsidiary of that company, at any time—
(a) after the issue of the relevant holding, and
(b) before the relevant company, or any qualifying 90% subsidiary of that company, carries on that trade.
(3) The requirement of this section is not to be regarded as failing to be met merely because of the carrying on of the trade in question—
(a) by the partners in a partnership of which the relevant company, or a qualifying 90% subsidiary of that company, is a member, or
(b) by the parties to a joint venture to which the relevant company, or a qualifying 90% subsidiary of that company, is a party.
(4) The requirement of this section is not to be regarded as failing to be met if—
(a) merely because of anything done as a consequence of the relevant company or any other company being in administration or receivership, or
(b) merely because of the relevant company or any other company being wound up or dissolved without winding up,
the trade in question ceases to be carried on by the relevant company or a qualifying 90% subsidiary of that company and is subsequently carried on by a person who has not been connected, at any time after the date which is 12 months before the issue of the relevant holding, with the relevant company.
(5) Subsection (4) applies only if—
(a) the entry into administration or receivership and everything done in consequence of the company concerned being in administration or receivership, or
(b) the winding up or dissolution,
is for genuine commercial reasons and is not part of a scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax.
(6) In this section “the trade in question” means so much of the relevant qualifying activity mentioned in subsection (1) as consists of—
(a) a trade which was being carried on at the time when the relevant holding was issued, or
(b) a trade for the carrying on of which preparations were being made at that time.
(7) The definition of “relevant qualifying activity” in subsection (8) of section 293 applies for the purposes of this section as it applies for the purposes of that section.
(1) The requirement of this section is that, if the relevant holding is issued after the initial investing period, condition A, B or C must be met.
(2) “The initial investing period” means—
(a) where the relevant company is a knowledge-intensive company at the investment date, the period of 10 years beginning with—
(i) the relevant first commercial sale, or
(ii) if the relevant company so elects, the date by reference to which that company is treated as reaching an annual turnover of £200,000 (see section 331B), and
(b) in any other case, the period of 7 years beginning with that sale.
(3) Condition A is that—
(a) a relevant investment was made in the relevant company before the end of the initial investing period, and
(b) some or all of the money raised by that investment was employed for the purposes of the relevant qualifying activity (or a part of it).
(4) Condition B is that—
(a) the total amount of relevant investments made in the relevant company in a period of 30 consecutive days which includes the investment date is at least 50% of the average turnover amount, and
(b) the money raised by those investments is employed for the purpose of entering a new product or geographical market.
(5) Condition C is that—
(a) condition B in subsection (4) or condition B in section 175A(4) (EIS: permitted company age requirement) was previously met in relation to one or more relevant investments made in the relevant company, and
(b) some or all of the money raised by those investment was employed for the purposes of the relevant qualifying activity.
(6) “The relevant first commercial sale” means the earliest of the following—
(a) the first commercial sale made by the relevant company,
(b) the first commercial sale made by a company that is at the investment date, or before that date has been, a 51% subsidiary of the relevant company (including a sale made by a company before it became such a subsidiary but, if it is not such a subsidiary at the investment date, not a sale made after it last ceased to be such a subsidiary),
(c) the first commercial sale made by any person who previously (at any time) carried on a trade which was subsequently carried on, on or before the investment date, by—
(i) the relevant company, or
(ii) a company that is at the investment date, or before that date has been, a 51% subsidiary of the relevant company,
(including a trade subsequently carried on by such a company before it became such a subsidiary but, if it not such a subsidiary at the investment date, not a trade which it carried on only after it last ceased to be such a subsidiary);
(d) the first commercial sale made by a company which becomes a 51% subsidiary of the relevant company after the investment date in circumstances where all or part of the money raised by the issue of the relevant holding is employed for the purposes of an activity carried on by that subsidiary (including a sale made by such a company before it became such a subsidiary);
(e) the first commercial sale made by any person who previously (at any time) carried on a trade which was subsequently carried on by a company mentioned in paragraph (d) (including a trade carried on by such a company before it became such a subsidiary);
(f) if the money raised by the issue of the relevant holding (or any part of it) is employed for the purposes of a trade which has been transferred after the investment date to the relevant company or a 51% subsidiary of that company (or to a partnership of which the relevant company or such a subsidiary is a member), having previously (at any time) been carried on by another person, the first commercial sale made by that other person.
(7) “The average turnover amount” means one fifth of the total relevant turnover amount for the relevant five year period.
(7A) Subject to subsection (7B), the relevant five year period is the five year period which ends immediately before the beginning of the last accounts filing period.
(7B) If the last accounts filing period ends more than 12 months before the investment date, the relevant five year period is the five year period which ends 12 months before the investment date.
(8) In this section—
“entering a new product or geographical market” has the same meaning as in Commission Regulation (EU) No 651/2014 (General block exemption Regulation) as it had effect in the United Kingdom immediately before IP completion day;
“first commercial sale” has the same meaning as in the European Commission's Guidelines on State aid to promote risk finance investments (as those guidelines had effect in the United Kingdom immediately before IP completion day);
“the investment date” means the date the relevant holding is issued;
“the last accounts filing period” means the last period for filing (within the meaning of section 442 of the Companies Act 2006) for the relevant company which ends before the date on which the relevant holding is issued;
“relevant investment” has the meaning given by section 292A(3), and section 292A(4) and (4A) (which determines when certain investments are made) applies for the purposes of this section;
“relevant qualifying activity” means the qualifying activity for which the money raised by the issue of the relevant holding is employed;
“the total relevant turnover amount” for a period is—
if the relevant company is a single company at the investment date, the sum of—
the relevant company's turnover for that period,
if all or part of the money raised by the issue of the relevant shares is employed for the purposes of an activity carried on by a company which becomes a 51% subsidiary of the relevant company after the investment date, the turnover for that period of that subsidiary (or, if there is more than one, each of them), and
if all or part of the money raised by the issue of the relevant shares is employed for the purposes of a transferred trade, the turnover of that trade for so much of that period as falls before the trade became a transferred trade (except to the extent that it is already included in calculating the amounts within sub-paragraphs (i) and (ii));
if the relevant company is a parent company at the investment date, the sum of—
the relevant company's turnover for that period,
the turnover for that period of each company which at the investment date is a 51% subsidiary of the relevant company,
if all or part of the money raised by the issue of the relevant holding is employed for the purposes of an activity carried on by a company which becomes a 51% subsidiary of the relevant company after the investment date, the turnover for that period of that subsidiary (or, if there is more than one, each of them), and
if all or part of the money raised by the issue of the relevant shares is employed for the purposes of a transferred trade, the turnover of that trade for so much of that period as falls before the trade became a transferred trade (except to the extent that it is already included in calculating the amounts within sub-paragraphs (i) to (iii));
“transferred trade” means a trade which has been transferred to the company which is carrying on the trade at the time the money raised by the issue of the relevant holding is employed or to a partnership of which that company is a member;
“turnover”—
in relation to a company, has the meaning given by section 474(1) of the Companies Act 2006 and is to be determined by reference to the accounts of companies and amounts recognised for accounting purposes (and such apportionments of those amounts as are just and reasonable are to be made for the purpose of determining a company's turnover for a period);
in relation to any other person carrying on a trade, also has the meaning given by section 474(1) of that Act (reading references in that provision to a company as references to the person) and is to be determined by reference to the accounts of the person and amounts recognised for accounting purposes (and such apportionments of those amounts as are just and reasonable are to be made for the purpose of determining a person's turnover for a period);
in relation to a transferred trade carried on by a company or other person, means such proportion of the turnover of the company or other person as it is just and reasonable to attribute to the transferred trade;
and section 280B(8) and (9) (meaning of “trade” etc) applies for the purposes of this section as it applies for the purposes of section 280B.
(1) The requirement of this section is that the relevant company must be an unquoted company.
(2) In this section “unquoted company” means a company none of whose shares, stocks, debentures or other securities are marketed to the general public.
(3) For the purposes of subsection (2), shares, stocks, debentures or other securities are marketed to the general public if they are—
(a) listed on a recognised stock exchange,
(b) listed on a designated exchange in a country outside the United Kingdom, or
(c) dealt in ... outside the United Kingdom by such means as may be designated.
(4) In subsection (3)(b) and (c) “designated” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that provision.
(5) An order made for the purposes of subsection (3)(b) may designate an exchange by name, or by reference to any class or description of exchanges, including a class or description framed by reference to any authority or approval given in a country outside the United Kingdom.
(6) If—
(a) any shares in or securities of a company are included in the qualifying holdings of the investing company, and
(b) that company ceases to be an unquoted company at any time while the investing company is approved as a VCT,
the requirements of this section are to be treated, in relation to shares or securities acquired before that time, as continuing to be met for a period of 5 years after that time.
(1) The control element of the requirement is that—
(a) the relevant company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the relevant company, and
(b) no arrangements must be in existence by virtue of which the relevant company could fail to meet paragraph (a).
(2) The independence element of the requirement is that—
(a) the relevant company must not be under the control of another company (or of another company and any other person connected with that other company), and
(b) no arrangements must be in existence by virtue of which the relevant company could fail to meet paragraph (a).
(3) This section is subject to section 327(7) (exchange of shares).
(A1) The requirement of this section in the case of a relevant company that is a single company and not a specified Northern Ireland company is that the value of the company’s gross assets—
(a) did not exceed £30 million immediately before the issue of the relevant holding, and
(b) did not exceed £35 million immediately afterwards.
(A2) The requirement of this section in the case of a relevant company that is a parent company and not a specified Northern Ireland company is that the value of the group assets—
(a) did not exceed £30 million immediately before the issue of the relevant holding, and
(b) did not exceed £35 million immediately afterwards.
(1) The requirement of this section in the case of a relevant company that is a single company and a specified Northern Ireland company is that the value of the company's gross assets—
(a) did not exceed £15 million immediately before the issue of the relevant holding, and
(b) did not exceed £16 million immediately afterwards.
(2) The requirement of this section in the case of a relevant company that is a parent company and a specified Northern Ireland company is that the value of the group assets—
(a) did not exceed £15 million immediately before the issue of the relevant holding, and
(b) did not exceed £16 million immediately afterwards.
(3) The value of the group assets means the sum of the values of the gross assets of each of the members of the group, ignoring any that consist in rights against, or shares in or securities of, another member of the group.
(1) If the relevant company is a single company, the full-time equivalent employee number for it must be less than the permitted limit when the relevant holding is issued.
(2) If the relevant company is a parent company, the sum of—
(a) the full-time equivalent employee number for it, and
(b) the full-time equivalent employee numbers for each of its qualifying subsidiaries,
must be less than the permitted limit when the relevant holding is issued.
(3) The full-time equivalent employee number for a company is calculated as follows—
Step 1
Find the number of full-time employees of the company.
Step 2
Add, for each employee of the company who is not a full-time employee, such fraction as is just and reasonable.
The result is the full-time equivalent employee number.
(3A) The permitted limit” means—
(a) if the relevant company is a knowledge-intensive company at the time the relevant holding is issued (see section 331A), 500, and
(b) in any other case, 250.
(3B) The Treasury may by regulations amend subsection (3A)(a) or (b) by substituting a different number for the number for the time being specified there.
(4) In this section references to an employee—
(a) include a director, but
(b) do not include—
(i) an employee on maternity , paternity , shared parental , parental bereavement or neonatal care leave, or
(ii) a student on vocational training.
297B The proportion of skilled employees requirement
(1) The requirement of this section is that, where the conditions in subsection (2) are met, at all times in the period of 3 years beginning with the issue of the relevant holding—
(a) if the relevant company is a single company, the FTE skilled employee number must be at least 20% of the FTE employee number, and
(b) if the relevant company is a parent company, the FTE group skilled employee number must be at least 20% of the FTE group employee number.
(2) The conditions are that—
(a) the requirements one or more of sections 292A, 292AA, 294A and 297A (the maximum risk finance investments when relevant holding is issued requirement and the number of employees requirement) is or are met only by reason of the relevant company being a knowledge-intensive company at the time the relevant holding was issued, and
(b) the innovation condition in section 331A(6) was not met by the relevant company at that time.
(3) The requirement of this section is not to be regarded as failing to be met at a time when the relevant company, by virtue of section 292 (companies in administration or receivership), is not regarded as having ceased to meet the trading requirement.
(4) In this section “FTE employee number”, “FTE group employee number”, “FTE skilled employee number” and “FTE group skilled employee number” have the meaning given by section 331A(10) (meaning of “knowledge-intensive company”).
299 The property managing subsidiaries requirement
(1) Any property managing subsidiary that the relevant company has must be a qualifying 90% subsidiary of the company.
(2) “Property managing subsidiary” means a subsidiary of the relevant company whose business consists wholly or mainly in the holding or managing of land or any property deriving its value from land.
(3) In subsection (2) references to property deriving its value from land include—
(a) any shareholding in a company deriving its value directly or indirectly from land,
(b) any partnership interest deriving its value directly or indirectly from land,
(c) any interest in settled property deriving its value directly or indirectly from land, and
(d) any option, consent or embargo affecting the disposition of land.
299A The no disqualifying arrangements requirement
(1) The relevant holding must not have been issued, nor any money raised by the issue employed, in consequence or anticipation of, or otherwise in connection with, disqualifying arrangements.
(2) Arrangements are “disqualifying arrangements” if—
(a) the main purpose, or one of the main purposes, of the arrangements is to secure—
(i) that a qualifying activity is or will be carried on by the relevant company or a qualifying 90% subsidiary of that company, and
(ii) that shares or securities issued by the relevant company may be comprised in any company's qualifying holdings or that one or more persons may obtain relevant tax relief in respect of such shares which raise money for the purposes of that qualifying activity,
(b) that qualifying activity is the relevant qualifying activity by reference to which the requirement in section 293(1)(b) (money raised to be employed within two years for relevant qualifying activity) is met in relation to the relevant holding, and
(c) one or both of conditions A and B are met.
(3) Condition A is that, as a (direct or indirect) result of the money raised by the issue of the relevant holding being employed as required by section 293(1)(b), an amount representing the whole or the majority of the amount raised is, in the course of the arrangements, paid to or for the benefit of a relevant person or relevant persons.
(4) Condition B is that, in the absence of the arrangements, it would have been reasonable to expect that the whole or greater part of the component activities of the relevant qualifying activity would have been carried on as part of another business by a relevant person or relevant persons.
(5) For the purposes of this section it is immaterial whether the relevant company is a party to the arrangements.
(6) In this section—
“component activities” means—
if the relevant qualifying activity is within section 291(2), the carrying on of a qualifying trade which constitutes that activity, and
if the relevant qualifying activity is within section 291(3), the preparations to carry on a qualifying trade which constitute that activity;
“arrangements” includes any scheme, agreement, understanding, transaction or series of transactions (whether or not legally enforceable);
“relevant person” means a person who is a party to the arrangements or a person connected with such a party;
“qualifying activity” has the same meaning as in section 291;
“relevant tax relief”, in respect of shares, means one or more of the following—
relief under Chapter 6 of Part 4 (losses on disposal of shares) in respect of the shares;
EIS relief (within the meaning of Part 5) in respect of the shares;
SEIS relief (within the meaning of Part 5A) in respect of the shares;
SI relief (within the meaning of Part 5B) in respect of the shares;
relief under section 150A or 150E of TCGA 1992 (enterprise investment scheme and seed enterprise investment scheme) in respect of the shares;
relief under Schedule 5B to that Act in consequence of which deferral relief is attributable to the shares;
relief under Schedule 5BB to that Act (seed enterprise investment scheme: re-investment) in consequence of which SEIS re-investment relief is attributable to the shares (see paragraph 4 of that Schedule).
(1) For the purposes of this Chapter, a trade is a qualifying trade if—
(a) it is conducted on a commercial basis and with a view to the realisation of profits, and
(b) it does not consist wholly or as to a substantial part in the carrying on of excluded activities (see sections 303 to 310).
(2) The carrying on of any activities of research and development from which it is intended—
(a) that a trade will be derived which will be a qualifying trade, or
(b) that a trade will benefit which is or will be a qualifying trade,
is to be treated as the carrying on of a qualifying trade.
(3) But preparing to carry on such activities does not count as preparing to carry on a qualifying trade.
(4) References in this section to a trade are to be read without regard to the definition of “trade” in section 989.
(1) For the purposes of this Chapter, a company (“the subsidiary”) is a qualifying 90% subsidiary of the relevant company at any time when the following conditions are met—
(a) the relevant company possesses at least 90% of the issued share capital of, and at least 90% of the voting power in, the subsidiary,
(b) the relevant company would—
(i) in the event of a winding up of the subsidiary, or
(ii) in any other circumstances,
be beneficially entitled to receive at least 90% of the assets of the subsidiary which would then be available for distribution to equity holders of the subsidiary,
(c) the relevant company is beneficially entitled to receive at least 90% of any profits of the subsidiary which are available for distribution to equity holders of the subsidiary,
(d) no person other than the relevant company has control of the subsidiary, and
(e) no arrangements are in existence by virtue of which any of the conditions in paragraphs (a) to (d) would cease to be met.
(1A) For the purposes of this Chapter, a company (“company A”) which is a subsidiary of a company that is not the relevant company (“company B”) is a qualifying 90% subsidiary of the relevant company if—
(a) company A would be a qualifying 90% subsidiary of company B (if company B were the relevant company), and company B is a qualifying 100% subsidiary of the relevant company, or
(b) company A is a qualifying 100% subsidiary of company B, and company B is a qualifying 90% subsidiary of the relevant company.
(1B) For the purposes of subsection (1A), no account is to be taken of any control the relevant company may have of company A.
(1C) For those purposes, a company (“company X”) is a qualifying 100% subsidiary of another company (“company Y”) at any time when the conditions in subsection (1)(a) to (e) would be met if—
(a) company X were the subsidiary,
(b) company Y were the relevant company, and
(c) in subsection (1) for “at least 90%” in each place there were substituted “100%”.
(2) Subsections (3), (4) and (5) of section 302 apply in relation to the conditions in subsection (1)—
(a) as they apply in relation to the conditions in subsection (2) of that section, but
(b) with the omission from subsection (5) of “or (as the case may be) by another subsidiary of that company”.
(3) For the purposes of subsection (1)—
(a) the persons who are equity holders of the subsidiary, and
(b) the percentage of the assets of the subsidiary to which an equity holder would be entitled,
are to be determined in accordance with Chapter 6 of Part 5 of CTA 2010.
(4) In making that determination—
(a) references in section 166 of that Act to company A are to be read as references to an equity holder, and
(b) references in that section to a winding up are to be read as including references to any other circumstances in which assets of the subsidiary are available for distribution to its equity holders.
(1) For the purposes of this Chapter, a company (“the subsidiary”) is a qualifying subsidiary of the relevant company if the following conditions are met.
(2) The conditions are that—
(a) the subsidiary is a 51% subsidiary of the relevant company,
(b) no person other than the relevant company, or another of its subsidiaries, has control of the subsidiary, and
(c) no arrangements are in existence by virtue of which either of the conditions in paragraphs (a) and (b) would cease to be met.
(3) The conditions do not cease to be met merely because the subsidiary or any other company is wound up, if the winding up—
(a) is for genuine commercial reasons, and
(b) is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(4) The conditions do not cease to be met merely because of anything done as a consequence of the subsidiary or any other company being in administration or receivership, if—
(a) the entry into administration or receivership, and
(b) everything done as a consequence of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(5) The conditions do not cease to be met merely because arrangements are in existence for the disposal by the relevant company or (as the case may be) by another subsidiary of that company of all its interest in the subsidiary, if the disposal—
(a) is to be for genuine commercial reasons, and
(b) is not to be part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(1) This section applies for the purposes of this Chapter.
(2) A company has a “permanent establishment” in the United Kingdom if (and only if)—
(a) it has a fixed place of business there through which the business of the company is wholly or partly carried on, or
(b) an agent acting on behalf of the company has and habitually exercises there authority to enter into contracts on behalf of the company.
(3) For the purposes of this section “fixed place of business” includes (without prejudice to the generality of that expression)—
(a) a place of management,
(b) a branch,
(c) an office,
(d) a factory,
(e) a workshop,
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and
(g) a building site or construction or installation project.
(4) If the condition in subsection (5) is met, a company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that—
(a) a fixed place of business is maintained there for the purpose of carrying on activities for the company, or
(b) an agent carries on activities there for and on behalf of the company.
(5) The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character.
(6) For this purpose “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—
(a) the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company,
(b) the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery,
(c) the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and
(d) purchasing goods or merchandise, or collecting information, for the company.
(7) A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it carries on business there through an agent of independent status (including a broker or a general commission agent) acting in the ordinary course of the agent's business.
(8) A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it controls a company that—
(a) is resident there, or
(b) carries on business there (whether through a permanent establishment or otherwise).
(9) The Treasury may by regulations amend this section.
(1) The following are excluded activities for the purposes of sections 290 and 300—
(a) dealing in land, in commodities or futures or in shares, securities or other financial instruments,
(b) dealing in goods otherwise than in the course of an ordinary trade of wholesale or retail distribution,
(c) banking, insurance, money-lending, debt-factoring, hire-purchase financing or other financial activities,
(d) leasing (including letting ships on charter or other assets on hire),
(e) receiving royalties or licence fees,
(f) providing legal or accountancy services,
(g) property development,
(h) farming or market gardening,
(i) holding, managing or occupying woodlands, any other forestry activities or timber production,
(ia) shipbuilding,
(ib) producing coal,
(ic) producing steel,
(j) operating or managing hotels or comparable establishments or managing property used as an hotel or comparable establishment,
(k) operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home, ...
(ka) generating or exporting electricity or making electricity generating capacity available,
(kb) generating heat,
(kc) generating any form of energy not within paragraph (ka) or (kb),
(kd) producing gas or fuel, and
(l) any activities which are excluded activities under section 310 (provision of services or facilities for another business).
(2) Subsection (1) is supplemented by the following provisions—
(a) section 304 (wholesale and retail distribution),
(b) section 305 (leasing of ships),
(c) section 306 (receipt of royalties and licence fees),
(d) section 307 (property development),
(da) section 307A (shipbuilding),
(db) section 307B (producing coal),
(dc) section 307C (producing steel),
(e) section 308 (hotels and comparable establishments), ...
(f) section 309 (nursing homes and residential care homes), ... and
(g) section 309A (export of electricity).
(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
304 Excluded activities: wholesale and retail distribution
(1) This section supplements section 303(1)(b).
(2) In this section—
(a) subsections (3) and (4) are for determining whether a trade is a trade of wholesale or retail distribution, and
(b) subsections (5) and (6) are for determining whether a trade of wholesale or retail distribution is an ordinary trade of wholesale or retail distribution.
(3) A trade of wholesale distribution is one in which goods are offered for sale and sold to persons for resale by them, or for processing and resale by them, to members of the general public for their use or consumption.
(4) A trade of retail distribution is one in which goods are offered or exposed for sale and sold to members of the general public for their use or consumption.
(5) A trade of wholesale or retail distribution is not an ordinary trade of wholesale or retail distribution if—
(a) it consists to a substantial extent—
(i) in dealing in goods of a kind which are collected or held as an investment, or
(ii) in that activity and any other excluded activity taken together, and
(b) a substantial proportion of those goods are held for a period which is significantly longer than the period for which the trader would reasonably be expected to hold them while trying to dispose of them at their market value.
(6) In determining whether a trade of wholesale or retail distribution is an ordinary trade of wholesale or retail distribution regard is to be had to the extent to which it has the following features—
(a) the goods are bought by the trader in quantities larger than those in which the trader sells them,
(b) the goods are bought and sold by the trader in different markets,
(c) the trader employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, in addition to any remuneration paid to any person connected with it,
(d) there are purchases or sales from or to persons who are connected with the trader,
(e) purchases are matched with forward sales or vice versa,
(f) the goods are held by the trader for longer than is normal for goods of the kind in question,
(g) the trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade, and
(h) the trader does not take physical possession of the goods.
(7) In subsection (6)—
(a) the features in paragraphs (a) to (c) are regarded as indications that the trade is an ordinary trade of wholesale or retail distribution, and
(b) those in paragraphs (d) to (h) are regarded as indications to the contrary.
(1) This section supplements section 303(1)(d) so far as it relates to the leasing of ships other than offshore installations or pleasure craft.
(2) In the following provisions “ship” accordingly means a ship other than an offshore installation or a pleasure craft.
(3) If the requirements of subsection (4) are met, a trade is not to be regarded as consisting in the carrying on of excluded activities within section 303(1)(d) as a result only of its consisting in letting ships on charter.
(4) The requirements of this subsection are that—
(a) every ship let on charter by the company carrying on the trade is beneficially owned by the company,
(b) every ship beneficially owned by the company is registered in the United Kingdom,
(c) the company is solely responsible for arranging the marketing of the services of its ships, and
(d) the conditions mentioned in subsection (5) are met in relation to every letting on charter by the company.
(5) The conditions referred to in subsection (4)(d) are—
(a) the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer,
(b) no provision for the grant of a new letting to end more than 12 months after the provision is made (whether in the charterparty or otherwise) is in force during the period of the letting otherwise than at the option of the charterer,
(c) the letting is by way of a bargain at arm's length between the company and a person who is not connected with it,
(d) under the terms of the charter the company is responsible as principal—
(i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry, and
(ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period, and
(e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company.
(6) If in the case of the company carrying on the trade (“the letting company”) the charterer is also a company and—
(a) the charterer is a qualifying subsidiary of the letting company, or
(b) the letting company is a qualifying subsidiary of the charterer, or
(c) both companies are qualifying subsidiaries of a third company,
subsection (5) has effect with the omission of paragraph (c).
(7) If any of the requirements of subsection (4) is not met in relation to any lettings of ships, the trade is not, as a result, to be treated as consisting in the carrying on of excluded activities if—
(a) those lettings, and
(b) any other excluded activities
do not, taken together, amount to a substantial part of the trade.
(8) In this section “pleasure craft” means any ship of a kind primarily used for sport or recreation.
306 Excluded activities: receipt of royalties and licence fees
(1) This section supplements section 303(1)(e) (receipt of royalties and licence fees).
(2) If the requirement of subsection (3) is met, a trade is not to be regarded as consisting in the carrying on of excluded activities within section 303(1)(e) as a result only of its consisting to a substantial extent in the receiving of royalties or licence fees.
(3) The requirement of this subsection is that the royalties or licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
(4) For this purpose an intangible asset is a “relevant intangible asset” if the whole or greater part (in terms of value) of it has been created—
(a) by the relevant company, or
(b) by a company which was a qualifying subsidiary of the relevant company throughout a period during which it created the whole or greater part (in terms of value) of the intangible asset.
(5) In the case of an intangible asset that is intellectual property, references to the creation of an asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
(6) In this section—
...
“intangible asset” means any asset which falls to be treated as an intangible asset in accordance with generally accepted accountancy practice, and
“intellectual property” means—
any patent, trade mark, registered design, copyright, design right, performer's right or plant breeder's right, or
any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a).
(7) If—
(a) the relevant company acquired all the shares (“old shares”) in another company (“the old company”) at a time when the only shares issued in the relevant company were subscriber shares, and
(b) the consideration for the old shares consisted wholly of the issue of shares in the relevant company,
references in subsection (4) to the relevant company include the old company.
(1) This section supplements section 303(1)(g).
(2) “Property development” means the development of land—
(a) by a company which has, or at any time has had, an interest in the land, and
(b) with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed.
(3) For this purpose “interest in land” means, subject to subsection (4)—
(a) any estate, interest or right in or over land, including any right affecting the use or disposition of land, or
(b) any right to obtain such an estate, interest or right from another which is conditional on the other's ability to grant it.
(4) References in this section to an interest in land do not include—
(a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land, or
(b) in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.
In section 303(1)(ia) “shipbuilding” has the same meaning as in the Framework on state aid to shipbuilding (2003/C 317/06), published in the Official Journal on 30 December 2003 , except that references in that Framework to building in the Union are to be read as including building in the United Kingdom.
(1) This section supplements section 303(1)(ib).
(2) “Coal” has the meaning given by Article 2 of Council Regulation (EC) No. 1407/2002 (state aid to coal industry).
(3) The production of coal includes the extraction of it.
In section 303(1)(ic) “steel” means any of the steel products listed in Annex 1 to the Guidelines on national regional aid (2006/C 54/08), published in the Official Journal on 4 March 2006.
308 Excluded activities: hotels and comparable establishments
(1) This section supplements section 303(1)(j).
(2) The reference to a comparable establishment is to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (with or without catering services).
(3) The activities of a person are not to be taken to fall within section 303(1)(j) unless that person has an estate or interest in, or is in occupation of, the hotel or comparable establishment in question.
309 Excluded activities: nursing homes and residential care homes
(1) This section supplements section 303(1)(k).
(2) “Nursing home” means any establishment which exists wholly or mainly for the provision of nursing care—
(a) for persons suffering from sickness, injury or infirmity, or
(b) for women who are pregnant or have given birth.
(3) “Residential care home” means any establishment which exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care because of—
(a) old age,
(b) mental or physical disability,
(c) past or present dependence on alcohol or drugs,
(d) any past illnesses, or
(e) past or present mental disorder.
(4) The activities of a person are not to be taken to fall within section 303(1)(k) unless that person has an estate or interest in, or is in occupation of, the nursing home or residential care home in question.
310 Excluded activities: provision of services or facilities for another business
(1) Providing services or facilities for a business carried on by another person (other than a company of which the provider of the services or facilities is a qualifying subsidiary) is an excluded activity if—
(a) the business consists wholly or as to a substantial part of activities falling within any of paragraphs (a) to (ka) of section 303(1), and
(b) a controlling interest in the business is held by a person who also has a controlling interest in the business carried on by the provider of the services or facilities.
(2) Subsections (3) to (5) explain what is meant by a controlling interest in a business for the purposes of subsection (1)(b).
(3) In the case of a business carried on by a company, a person (“A”) has a controlling interest in the business if—
(a) A controls the company,
(b) the company is a close company and A or an associate of A, being a director of the company, either—
(i) is the beneficial owner of more than 30% of the ordinary share capital of the company, or
(ii) is able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that share capital, or
(c) at least half the business could, in accordance with section 942 of CTA 2010 (options for purposes of ownership condition), be regarded as belonging to A for the purposes of section 941 of that Act (trade transfers without change of ownership: ownership condition).
(4) In any other case, a person has a controlling interest in a business if the person is entitled to at least half the assets used for, or of the income arising from, the business.
(5) For the purposes of this section—
(a) any rights or powers of a person who is an associate of another are to be attributed to that other person, and
(b) “business” includes any trade, profession or vocation.
None of the requirements of this Chapter is to be regarded, at a time when the relevant company is being wound up, as being, on that account, a requirement that is not met in relation to that company if—
(a) the requirements of this Chapter would be met in relation to that company apart from the winding up, and
(b) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
312A Power to require information relating to disqualifying arrangements
(1) Subsection (2) applies if an officer of Revenue and Customs has reason to believe that the relevant company has issued the relevant holding to the investing company in consequence of or, or otherwise in connection with, disqualifying arrangements (within the meaning of section 299A(2)).
(2) The officer may by notice require any person concerned to supply the officer within such time as may be specified in the notice with—
(a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, such arrangements exist or have existed, and
(b) such other information as the officer may reasonably require for the purposes of section 299A and as that person has or can reasonably obtain.
(3) The period specified in a notice under subsection (2) must be at least 60 days.
(4) A “person concerned” means—
(a) the relevant company,
(b) the investing company,
(c) any person connected with either of those companies, and
(d) any person whom the officer has reason to believe is or was a party to the arrangements in question.
(1) In this Chapter —
“the investing company” has the meaning given by section 286(1),
“the relevant company” has the meaning given by section 286(1), and
“the relevant holding” has the meaning given by section 286(1).
(2) References in this Chapter to the issue of any securities, in relation to any security consisting in a liability in respect of an unsecured loan, have effect as references to the making of the loan.
(3) References in sections 303 to 309 to a trade are to be read without regard to the definition of “trade” in section 989 (see also section 300(4)).
(4) For the purposes of sections 296 and 310(3) and (4), the question whether a person controls a company is to be determined in accordance with sections 450 and 451 of CTA 2010 with the modification given by subsection (6).
(5) For the purposes of this Chapter (other than section 312A), section 993 (meaning of “connected persons”) applies as if references to “control” in that section were to be read in accordance with sections 450 and 451 of CTA 2010 with the modification given by subsection (6).
But section 993 does not apply for the purposes of the definition of “independent expert” in section 331A(10).
(6) The modification is that, in determining whether a person controls a company, the following are to be ignored—
(a) any person's possession of, or entitlement to acquire, fixed-rate preference shares in the company that do not carry voting rights, ...
(b) any person's possession of, or entitlement to acquire, rights as a loan creditor of the company, and
(c) any right to dividends carried by shares in the company where the shares—
(i) are eligible shares, and
(ii) are held by the investing company.
(7) In subsection (6) “fixed-rate preference shares” means shares which—
(a) were issued wholly for new consideration,
(b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and
(c) do not carry any right to dividends other than dividends which—
(i) are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and
(ii) together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued,
and in paragraph (a) “new consideration” has the meaning given by section 1115 of CTA 2010.
(8) In subsection (6) “eligible shares” has the same meaning as in Chapter 3 (see section 285(3A) and (3B)).
(1) Regulations may make provision for tax enactments specified by the regulations to have effect as if—
(a) a VCT-in-liquidation that is not a VCT were, or were during any prescribed period of its winding up, a VCT,
(b) VCT approval withdrawn from a company—
(i) at any time during the period when it is a VCT-in-liquidation, or
(ii) at any time during a prescribed part of that period,
were withdrawn at a prescribed time (and not at the time when it is actually withdrawn).
(2) In this section “prescribed” means specified by, or determined under, regulations.
315 Power to treat conditions for VCT approval as met with respect to VCT-in-liquidation
(1) Regulations may make provision for conditions mentioned in section 274(2) (conditions for approval as a VCT) to be treated for the purposes of section 274(1) as met, or as conditions that will be met, with respect to a VCT-in-liquidation.
(2) Provision under subsection (1) may be made so as to apply in relation to a VCT-in-liquidation—
(a) throughout its winding up, or
(b) during prescribed periods of its winding up.
(3) Regulations may, for purposes of tax enactments specified by the regulations, make provision for VCT approval to be treated as having been withdrawn, with effect from a time specified by or determined under the regulations, from a VCT-in-liquidation from which the Commissioners for Her Majesty's Revenue and Customs would have power to withdraw such approval but for provision made under subsection (1).
316 Power to make provision about distributions by VCT-in-liquidation
(1) Regulations may make provision for tax enactments specified by the regulations—
(a) to apply in relation to distributions from a VCT-in-liquidation (including, in particular, distributions in the course of dissolving it or winding it up),
(b) not to apply in relation to such distributions,
(c) to apply in relation to such distributions with modifications specified by the regulations.
(2) Provision under subsection (1) may be made so as to apply in relation to distributions from a VCT-in-liquidation made—
(a) at any time during its winding up, or
(b) during periods of its winding up specified by, or determined under, regulations.
317 Power to facilitate disposal to VCT by VCT-in-liquidation
(1) Regulations may make provision authorised by subsection (2) for cases where shares in or securities of a company are acquired by a VCT from a VCT-in-liquidation.
(2) The provision that may be made under subsection (1) for such a case is—
(a) provision for conditions mentioned in section 274(2) (conditions for approval as a VCT) to be treated for the purposes of section 274(1) as met, or as conditions that will be met, with respect to the VCT in relation to periods ending after the acquisition,
(b) provision for the shares or securities acquired to be treated, at times after the acquisition when they are held by the VCT, as meeting the requirements of Chapter 4 (provisions for determining whether shares or securities form part of qualifying holdings), and
(c) provision for shares in the VCT issued in connection with the acquisition of the shares or securities from the VCT-in-liquidation and either—
(i) issued to a person who is a member of the VCT-in-liquidation, or
(ii) issued to the VCT-in-liquidation and distributed by it in the course of its winding up or dissolution to a person who is one of its members,
to be treated, for the purposes of Schedule 5C to TCGA 1992 (VCTs: deferred charge on re-investment), as representing shares in the VCT-in-liquidation held by that person.
(3) Provision under subsection (1) may be made so as to apply in relation to shares or securities acquired from a VCT-in-liquidation—
(a) at any time during its winding up, or
(b) during periods of its winding up specified by, or determined under, regulations.
(4) In this section “securities” means any securities and includes any liability that is a security in relation to a company because of section 285(2) (securities).
318 Power in respect of periods before and after winding up
(1) Any power under sections 314 to 317 to make provision in relation to a VCT-in-liquidation includes power to make corresponding or similar provision in relation to—
(a) a company for whose winding up an application has been made to a court and which is not a VCT-in-liquidation but would be if, at the time that the application was made, the court had ordered the company's winding up to commence at that time, or
(b) a company that has been a VCT-in-liquidation but no longer is a VCT-in-liquidation because it has been wound up.
(2) For the purposes of making provision in reliance on subsection (1), references in sections 314 to 317 (however expressed) to a VCT-in-liquidation's winding up, or the commencement or ending of its winding up, may be taken to be references to, or to the commencement or ending of, the extension period for a company to which subsection (1) applies.
(3) In this section—
“the extension period”—
in relation to a company to which subsection (1)(a) applies, means the period beginning with the making of the application and ending with the earlier of its final determination and the company becoming a company that is being wound up, and
in relation to a company to which subsection (1)(b) applies, means the period between the end of the company's winding up and the company's dissolution, and
“prescribed” means specified by, or determined under, regulations.
(1) Provision made by regulations under sections 314 to 318 applies in cases, and subject to conditions, specified by regulations.
(2) Such provision may (but need not) be made so as to have effect in a particular case only for such period as may be specified by, or determined under, regulations.
(3) References in sections 314 to 318 to things done by a VCT-in-liquidation include things done by a liquidator of a VCT-in-liquidation.
(1) In this Chapter “VCT-in-liquidation” means a company—
(a) that is being wound up (whether or not under the law of a part of the United Kingdom and whether under the law of one, or more than one, territory),
(b) that was a VCT immediately before the commencement of its winding up, and
(c) whose winding up is for genuine commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(2) Regulations may, for purposes of this Chapter, make provision as to when a company's winding up is to be treated as commencing or ending in a case where it is wound up otherwise than under the law of a part of the United Kingdom or otherwise than under the law of a single territory.
(1) Regulations may make provision authorised by section 322 for cases where—
(a) there is a merger of two or more companies each of which is a VCT immediately before the merger begins to be effected, and
(b) the merger is for genuine commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(2) Provision made by regulations under subsection (1) applies—
(a) in cases, and
(b) subject to conditions (including conditions requiring approvals to be obtained),
specified by the regulations.