Income Tax Act 2007 section 257HG

Meaning of "qualifying business activity"

Section 257HG defines what counts as a "qualifying business activity" for the purposes of the seed enterprise investment scheme (SEIS), covering both trading activities and research and development carried on by the issuing company or its qualifying 90% subsidiaries.

• A qualifying business activity is either carrying on (or preparing to carry on) a new qualifying trade, or carrying on research and development linked to a new qualifying trade.
• The activity must be carried on by the issuing company itself or by a qualifying 90% subsidiary of that company.
• Research and development qualifies if a new qualifying trade is expected to be derived from it, or if an existing or planned new qualifying trade is expected to benefit from it.
• Where a subsidiary begins research and development, any work it carried out before it became a qualifying 90% subsidiary is disregarded.