Income Tax Act 2007 section 181

The trading requirement

Section 181 sets out the trading requirement that the issuing company must satisfy throughout period B in order to qualify under the Enterprise Investment Scheme.

• The company must exist wholly to carry on one or more qualifying trades (ignoring incidental purposes), or be a parent company whose group does not consist wholly or substantially of non-qualifying activities
• Where the company intends to set up qualifying subsidiaries to carry on qualifying trades, it is treated as a parent company and the group includes any future subsidiaries — but only while that intention is maintained
• When assessing a group's business, certain intra-group activities are disregarded, such as holding shares in subsidiaries, making loans to group companies, and holding property used for qualifying trades or related research and development
• Non-qualifying activities are defined as excluded activities (set out in sections 192 to 199) plus any activities carried on outside the course of a trade, other than research and development

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