Taxation (International and Other Provisions) Act 2010 section 259ND

Meaning of "50% investment" and "25% investment"

Section 259ND defines what it means for a person to hold a "50% investment" or a "25% investment" in another person, for the purposes of establishing control groups and related persons under the hybrid mismatch rules.

• A person holds the relevant percentage investment in a company if they own or are entitled to acquire that percentage of share capital or voting power, or would receive that percentage of disposal proceeds if the company were sold
• For non-company entities, the test looks at whether the person would receive the relevant percentage of distributed income or assets available on a winding-up
• Where two persons "act together" in relation to a target entity — through partnership agreements, common management, connected person relationships, or coordinated arrangements — one person is treated as holding all the other's rights and interests for the purpose of calculating their investment percentage
• An exception from the "acting together" rules applies where the same operator manages rights in a target entity through two separate collective investment schemes, provided HMRC are satisfied the management is not coordinated to influence the target's affairs