Income and Corporation Taxes Act 1988

Requirements as to the money raised by the investment in question U.K.

6 (1) The requirements of this paragraph are that the money raised by the issue of the relevant holding must—

(a) have been employed wholly for the purposes of the trade by reference to which the requirements of paragraph 3(3) above are satisfied; or

(b) be money which the relevant company or a [F1 relevant qualifying subsidiary] of that company is intending to employ wholly for the purposes of that trade.

(2) The requirements of sub-paragraph (1) above shall not be capable of being satisfied by virtue of paragraph (b) of that sub-paragraph at any time after twelve months have expired from whichever is applicable of the following, that is to say—

(a) in a case where the requirements of sub-paragraph (3) of paragraph 3 above were satisfied in relation to the time when the relevant holding was issued by virtue of paragraph (a) of that sub-paragraph, that time; and

(b) in a case where they were satisfied in relation to that time by virtue of paragraph (b) of that sub-paragraph, the time when the relevant company or, as the case may be, the subsidiary in question began to carry on the intended trade.

[F2 (2A) Where the relevant company is a company falling within paragraph 3(2)(aa) above, the requirements of this paragraph are not satisfied unless—

(a) the trader company is a company in relation to which the requirements of paragraph 3(2)(a) above are satisfied, or

(b) the trader company is a company in relation to which those requirements would be satisfied if its purposes were disregarded to the extent that they consist in the carrying on of activities such as are mentioned in paragraph 3(9)(a) and (b) and (10)(a) above, or

(c) the trader company is a [F1 relevant qualifying subsidiary] of the relevant company and falls within sub-paragraph (2B) below.

(2B) A [F1 relevant qualifying subsidiary] of the relevant company falls within this sub-paragraph if—

(a) apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, it exists wholly for the purpose of carrying on activities such as are mentioned in paragraph 3(9)(b) above; or

(b) it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments.

(2C) In sub-paragraph (2A) above “the trader company” means the company (whether the relevant company or a qualifying subsidiary of the relevant company) carrying on, or preparing to carry on, the trade by reference to which the requirements of paragraph 3(3) above are satisfied.]

(3) For the purposes of this paragraph money shall not be treated as employed otherwise than wholly for the purposes of a trade if the only amount employed for other purposes is an amount which is not a significant amount; and nothing in paragraph 1(3) above shall require any money whose use is disregarded by virtue of this sub-paragraph to be treated as raised by a different holding.

(4) References in this paragraph to employing money for the purposes of a trade shall include references to employing it for the purpose of preparing for the carrying on of the trade.

[F3 (5) For the purposes of this paragraph a company is a relevant qualifying subsidiary of another company at any time when it would be a qualifying subsidiary of that company if “90" were substituted for “75" in every place where “75" occurs in paragraph 10(3) below.]

Textual Amendments

F1 Words in Sch. 28B para. 6(1)(b)(2A)(c)(2B) substituted (with effect in accordance with s. 73(6) of the amending Act) by Finance Act 1998 (c. 36), s. 73(4)

F2 Sch. 28B para. 6(2A)-(2C) inserted (with effect in accordance with Sch. 9 para. 6 of the amending Act) by Finance Act 1997 (c. 16), Sch. 9 para. 4

F3 Sch. 28B para. 6(5) inserted (with effect in accordance with s. 73(6) of the amending Act) by Finance Act 1998 (c. 36), s. 73(4)