Corporation Tax Act 2010 section 81

The control and independence requirement

Section 81 sets out the control and independence requirement, one of the conditions a company must satisfy throughout the relevant period to qualify as a qualifying trading company for share loss relief purposes.

• The company must not control any company that is not its qualifying subsidiary, whether alone or together with a connected person, and no arrangements must exist that could cause it to breach this rule.
• The company must not be a 51% subsidiary of another company, nor be under the control of another company (or that company together with connected persons) without being its 51% subsidiary.
• No arrangements — including any scheme, agreement, or understanding, whether legally enforceable or not — must be in place that could cause either the control or the independence element to be breached at any time.
• The definition of "control" differs between the two elements: for the control element it follows the close companies definition, while for the independence element a separate general definition applies.