Land and Buildings Transaction Tax (Scotland) Act 2013 Schedule 11 paragraph 41

Disapplication of certain Corporation Tax Act provisions when determining subsidiary status

Paragraph 41 specifies that certain provisions of the Corporation Tax Act 2010 relating to option arrangements and their effect on profit and asset entitlements are to be ignored when determining whether a company qualifies as a 75% subsidiary for the purposes of reconstruction and acquisition relief.

• When assessing whether one company is a 75% subsidiary of another for LBTT relief purposes, specific sections of the Corporation Tax Act 2010 must be disregarded.
• The disregarded provisions are sections 171(1)(b) and (3), 173, 174, and 176 to 178 of the CTA 2010 — these deal primarily with the effect of option arrangements on a company's entitlement to profits and assets.
• This means that option arrangements (such as share options or agreements that could alter ownership proportions) should not be taken into account when testing whether the 75% economic ownership and asset entitlement thresholds are met.
• The disapplication applies specifically to the tests in paragraph 37(b) — entitlement to at least 75% of distributable profits — and paragraph 37(c) — entitlement to at least 75% of assets on a winding up.

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