Income Tax Act 2007 section 257ME

The control and independence requirements

Section 257ME sets out two requirements that a social enterprise must satisfy throughout the shorter applicable period: it must not control companies that are not qualifying subsidiaries, and it must remain independent of control by other companies.

• The social enterprise must not control any company that is not a qualifying subsidiary, whether on its own or together with a connected person, at any time during the shorter applicable period
• The social enterprise must not be a 51% subsidiary of another company, nor be under the control of another company (or a company together with a connected person), unless it is a 51% subsidiary of that company
• No arrangements may exist at any time during the shorter applicable period that could cause either the control requirement or the independence requirement to be breached, whether during or after that period
• The definitions of "control" and "connection" used in these tests draw on established statutory definitions, including those in the Corporation Tax Act 2010 (modified for charitable trusts) and section 993 of the Income Tax Act 2007