Corporation Tax Act 2010 section 78

Qualifying trading companies

Section 78 defines what constitutes a qualifying trading company for the purposes of share loss relief, setting out three conditions (A, B and C) that must all be satisfied.

• The company must meet four key requirements (trading, control and independence, qualifying subsidiaries, and property managing subsidiaries) either on the disposal date or within three years before it, provided it has not since become an excluded, investment or trading company.
• The company must have met those four requirements continuously for six years ending on the relevant date, or for a shorter period if it was not previously an excluded, investment or trading company.
• The company must satisfy the gross assets requirement both immediately before and immediately after the issue of the shares for which share loss relief is claimed.
• The company must meet the unquoted status requirement at the relevant time when the shares were issued.