Income Tax Act 2007 Schedule 2 paragraph 80

Meaning of "qualifying subsidiary"

Paragraph 80 modifies the definition of "qualifying subsidiary" in section 302 when determining whether shares or securities issued before 17 March 2004 form part of a company's qualifying holdings for venture capital trust purposes.

• For pre-17 March 2004 shares or securities, the qualifying subsidiary ownership threshold is set at 75% of issued share capital, voting power, distributable assets on winding up, and distributable profits — rather than the standard tests in section 302
• Any arrangement whereby a subsidiary is controlled by someone other than the relevant company is only permitted if it exists for genuine commercial reasons and is not part of a tax avoidance scheme
• The identity of equity holders and their entitlement to a subsidiary's assets is determined using the rules in Chapter 6 of Part 5 of the Corporation Tax Act 2010
• Several subsections of section 302 are omitted or replaced to reflect these modified requirements for older share and security issues