Income Tax Act 2007 section 191

Meaning of "qualifying subsidiary"

Section 191 defines what makes a company a "qualifying subsidiary" of another company for the purposes of the Enterprise Investment Scheme provisions.

• The subsidiary must be a 51% subsidiary of the relevant company, with no other person having control of it beyond the relevant company or its other subsidiaries
• No arrangements may exist that would cause these ownership and control conditions to cease being met
• The conditions are not broken merely because the subsidiary or another company is wound up, enters administration or receivership, provided this is for genuine commercial reasons and not part of a tax avoidance scheme
• Planned disposals of the relevant company's entire interest in the subsidiary do not breach the conditions, as long as the disposal is for genuine commercial reasons and not aimed at tax avoidance