Corporation Tax Act 2010 section 393

Qualifying 75% subsidiaries

Section 393 defines what a "principal company" is in relation to a leasing company and explains when a "relevant change" occurs in that relationship, which can trigger consequences under the rules on sales of lessors' leasing businesses.

• A principal company is the ultimate parent that owns at least 75% of a leasing company, either directly or through a chain of 75% subsidiaries, and is not itself a 75% subsidiary of another company
• The principal company must sit at the top of the ownership chain — if a parent is itself a 75% subsidiary of a higher company, you must look further up the chain to find the true principal company
• A "relevant change" in the relationship occurs on any day when a link in the ownership chain breaks — that is, when any company in the chain ceases to be a qualifying 75% subsidiary of the company above it
• The detailed definition of what constitutes a "qualifying 75% subsidiary" is set out separately in section 398 of the Corporation Tax Act 2010