Income and Corporation Taxes Act 1988

Meaning of “qualifying subsidiary” U.K.

10 (1) Subject to the following provisions of this paragraph, a company is a qualifying subsidiary of the relevant company for the purposes of this Schedule if—

(a) the company in question (“the subsidiary”), and

(b) where the relevant company has more than one subsidiary, every other subsidiary of the relevant company,

is a company falling within [F1 sub-paragraph] (3) below.

(2) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The subsidiary falls within this sub-paragraph if—

(a) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F4 (ca) the subsidiary is a 51 per cent. subsidiary of the relevant company;]

(d) no person other than the relevant company or another of its subsidiaries has control of the subsidiary within the meaning of section 840; and

(e) no arrangements are in existence by virtue of which [F5 either of the conditions in paragraphs (ca) and (d) above would cease to be met].

(4) The subsidiary shall not be regarded, at a time when it [F6 or any other company] is being wound up, as having ceased on that account to be a company falling within [F7 sub-paragraph] (3) above if F8 . . . —

(a) F9 . . . it would fall within [F10 that sub-paragraph] apart from the winding up; and

(b) F11 . . . the winding up is for bona fide commercial reasons [F12 and is not] part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.

[F13 (4A) Sub-paragraph (4B) below applies at a time when the subsidiary or any other company is in administration or receivership.

(4B) The subsidiary shall not be regarded, by reason only of anything done as a consequence of the company concerned being in administration or receivership, as having ceased to be a company falling within sub-paragraph (3) above 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 bona fide commercial reasons and is not part of a scheme or arrangement the main purpose of which or one of the main purposes of which is the avoidance of tax.

(4C) Sub-paragraph (2) of paragraph 11A below applies for the purposes of sub-paragraphs (4A) and (4B) above as it applies for the purpose of that paragraph.]

(5) The subsidiary shall not be regarded, at any time when arrangements are in existence for the disposal by the relevant company, or (as the case may be) by another subsidiary of that company, of all its interest in the subsidiary in question, as having ceased on that account to be a company falling within [F7 sub-paragraph] (3) above if F14 . . . the disposal is to be for bona fide commercial reasons [F15 and is not to be] part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.

(6) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in Sch. 28B para. 10(1) substituted (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 1997 (c. 16), Sch. 9 para. 5(1)

F2 Sch. 28B para. 10(2) repealed (with effect in accordance with Sch. 9 para. 6 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 9 para. 5(2), Sch. 18 Pt. 6(9), Note

F3 Sch. 28B para. 10(3)(a)-(c) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(a), Sch. 42 Pt. 2(13), Note 2

F4 Sch. 28B para. 10(3)(ca) inserted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(b)

F5 Words in Sch. 28B para. 10(3)(e) substituted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(c)

F6 Words in Sch. 28B para. 10(4) inserted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(d)(i)

F7 Words in Sch. 28B para. 10(4)(5) substituted (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 1997 (c. 16), Sch. 9 para. 5(3)

F8 Words in Sch. 28B para. 10(4) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(d)(ii), Sch. 42 Pt. 2(13), Note 2

F9 Word in Sch. 28B para. 10(4)(a) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(d)(iii), Sch. 42 Pt. 2(13), Note 2

F10 Words in Sch. 28B para. 10(4)(a) substituted (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 1997 (c. 16), Sch. 9 para. 5(4)

F11 Word in Sch. 28B para. 10(4)(b) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(d)(iv), Sch. 42 Pt. 2(13), Note 2

F12 Words in Sch. 28B para. 10(4)(b) substituted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(d)(v)

F13 Sch. 28B para. 10(4A)-(4C) inserted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(e)

F14 Words in Sch. 28B para. 10(5) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(f)(i), Sch. 42 Pt. 2(13), Note 2

F15 Words in Sch. 28B para. 10(5) substituted (with effect in accordance with Sch. 19 para. 16 of the amending Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(f)(ii)

F16 Sch. 28B para. 10(6) repealed (with effect in accordance with Sch. 19 para. 16 of the repealing Act) by Finance Act 2004 (c. 12), Sch. 19 para. 12(g), Sch. 42 Pt. 2(13), Note 2