Corporation Tax Act 2010 section 18M

Interpretation of section 18L(3)

Section 18M provides detailed definitions and rules for determining subsidiary status, trading company status, and consortium ownership, all of which are used when calculating augmented profits under section 18L(3).

• A company is a 51% subsidiary of another only if the parent would be entitled to more than 50% of distributable profits and more than 50% of assets on a winding up, and indirect ownership through a company that would treat a sale of the shares as trading income is disregarded.
• A "trading company" is one whose business consists wholly or mainly of carrying on one or more trades; a "relevant holding company" is one whose business consists wholly or mainly of holding shares in or securities of trading companies that are its 90% subsidiaries.
• A "quasi-subsidiary" of a company R is a company owned by a consortium of which R is a member, provided that company is not — and cannot under any arrangements become — a 75% subsidiary of any company.
• A company is consortium-owned if at least 75% of its ordinary share capital is beneficially held by two or more companies, each owning at least 5% of the capital and entitled to at least 5% of distributable profits and winding-up assets.