Income Tax Act 2007 section 183

The issuing company to carry on the qualifying business activity requirement

Section 183 requires that, throughout period B, the qualifying business activity for which money was raised by the share issue must be carried on only by the issuing company or its qualifying 90% subsidiary, with certain exceptions for insolvency events and pre-trading periods.

• The qualifying trade, any preparatory work, and any related research and development must be carried on only by the issuing company or a qualifying 90% subsidiary throughout period B.
• If another company carries on the qualifying trade before the issuing company or its qualifying 90% subsidiary begins that trade, this can be disregarded when assessing whether the requirement is met.
• The requirement is not treated as failed if the trade ceases due to administration, receivership, winding up or dissolution, provided the trade is then carried on by a person unconnected with the issuing company during period C.
• The insolvency exception only applies where the administration, receivership, winding up or dissolution is for genuine commercial reasons and not part of a tax avoidance scheme.