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[F1PART 5BU.K.Tax relief for social investments

Textual Amendments

F1Pt. 5B inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 11 para. 1

CHAPTER 4U.K.Eligibility: conditions relating to the social enterprise

Interpretation of conditions relating to the social enterpriseU.K.

257MVMeaning of “90% social subsidiary” of a social enterpriseU.K.

(1)For the purposes of this Chapter, a company (“the subsidiary”) is a 90% social subsidiary of another company (“the parent”) if—

(a)the subsidiary is a social enterprise,

(b)the parent possesses at least 90% of the issued share capital of, and at least 90% of the voting power in, the subsidiary,

(c)the parent would—

(i)in the event of a winding-up of the subsidiary, or

(ii)in any other circumstances,

be beneficially entitled to receive at least 90% of the assets of the subsidiary which would then be available for distribution to equity holders of the subsidiary,

(d)the parent is beneficially entitled to receive at least 90% of any profits of the subsidiary which are available for distribution to equity holders of the subsidiary,

(e)no person other than the parent has control of the subsidiary, and

(f)no arrangements are in existence as a result of which any of the conditions in paragraphs (a) to (e) would cease to be met.

(2)For the purposes of this Chapter, a company (“company A”) which is a subsidiary of another company (“company B”) is a 90% social subsidiary of a third company (“company C”) if—

(a)company A is a 90% social subsidiary of company B, and company B is a 100% social subsidiary of company C, or

(b)company A is a 100% social subsidiary of company B, and company B is a 90% social subsidiary of company C.

(3)For the purposes of subsection (2) no account is to be taken of any control company C may have of company A.

(4)For the purposes of subsection (2), a company (“company X”) is a 100% social subsidiary of another company (“company Y”) at any time when the conditions in subsection (1)(a) to (f) would be met if—

(a)company X were the subsidiary,

(b)company Y were the parent, and

(c)in subsection (1) for “at least 90%” there were substituted “ 100% ”.

(5)The conditions in subsection (1)(a) to (f) do not cease to be met merely because of anything done as a consequence of the subsidiary or any other company being wound up, or dissolved without being wound up, if the winding-up or dissolution—

(a)is for genuine commercial reasons, and

(b)is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.

(6)The conditions in subsection (1)(a) to (f) do not cease to be met merely because of anything done as a consequence of the subsidiary or any other company being in administration, or receivership, if—

(a)the entry into administration or receivership, and

(b)everything done as a consequence of the company concerned being in administration or receivership,

is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.

(7)The conditions in subsection (1)(a) to (f) do not cease to be met merely because any arrangements are in existence for the disposal by the parent of all its interest in the subsidiary if the disposal—

(a)is to be for genuine commercial reasons, and

(b)is not to be part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.

(8)For the purposes of subsection (1)—

(a)the persons who are equity holders of the subsidiary, and

(b)the percentage of the assets of the subsidiary to which an equity holder would be entitled,

are to be determined in accordance with Chapter 6 of Part 5 of CTA 2010.

(9)In making that determination—

(a)references in section 166 of that Act to company A are to be read as references to an equity holder, and

(b)references in that section to winding up are to be read as including references to any other circumstances in which assets of the subsidiary are available for distribution to its equity holders.]