SCHEDULES

SCHEDULE 5U.K.Enterprise management incentives

Part 3U.K.Qualifying companies

The trading activities requirement: parent companyU.K.

14(1)The trading activities requirement in the case of a parent company is that—U.K.

(a)at least one group company—

(i)disregarding any purposes within sub-paragraph (4), exists wholly for the purpose of carrying on one or more qualifying trades, and

(ii)is carrying on a qualifying trade or preparing to do so, and

(b)the business of the group does not consist (either wholly or as to a substantial part) in the carrying on of non-qualifying activities.

(2)The “business of the group” means what would be the business of the group if the activities of the group companies taken together were regarded as one business.

(3)For the purpose of determining the business of a group, activities of a group company are to be disregarded to the extent that they consist in—

(a)the holding of shares in or securities of, or the making of loans to, another group company,

(b)the holding and managing of property used by a group company for the purposes of one or more qualifying trades carried on by a group company, or

(c)incidental activities of a company which meets the trading activities requirement for a single company (see paragraph 13).

(4)The purposes referred to in sub-paragraph (1)(a)(i) are—

(a)the carrying on of any activities within sub-paragraph (3), and

(b)any purposes having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities.

(5)In this paragraph—

(a)group company” means any member of the group;

(b)incidental activities” means activities carried on in pursuance of purposes having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities;

(c)non-qualifying activities” means—

(i)excluded activities, or

(ii)activities carried on otherwise than in the course of a trade.

(6)This paragraph is supplemented by paragraph 15 (meaning of “qualifying trade”) read with paragraphs 16 to 23 (excluded activities).