Income Tax (Earnings and Pensions) Act 2003 section Schedule 5 paragraph 14

The trading activities requirement: parent company

Section Schedule 5 paragraph 14 sets out the trading activities requirement that a parent company must satisfy for the purposes of the Enterprise Management Incentives (EMI) scheme, ensuring that the group as a whole is substantially engaged in qualifying trades rather than non-qualifying activities.

• At least one company in the group must exist wholly to carry on one or more qualifying trades and must be either carrying on such a trade or preparing to do so
• The group's business, when viewed as a whole, must not consist wholly or substantially of non-qualifying activities such as excluded activities or activities outside the course of a trade
• Certain intra-group activities are disregarded when assessing the group's business, including holding shares in or lending to other group companies, managing property used for qualifying trades, and incidental activities
• When determining whether a group company exists wholly for the purpose of carrying on qualifying trades, activities such as intra-group shareholding, lending, property management and activities with no significant effect on the company's scope are ignored