Finance Act 1986

12 After paragraph 10 there shall be inserted the following paragraph—

“Parallel trades

10A (1) An individual is not entitled to relief in respect of any shares in a company where, at the date mentioned in subparagraph (2) below—

(a) he is one of a group of persons—

(i) who control the company; or

(ii) to whom belongs an interest amounting in the aggregate to more than a half share in the trade carried on by the company;

(b) he is also an individual, or one of a group of persons—

(i) controlling another company; or

(ii) to whom belongs an interest amounting in the aggregate to more than a half-share in another trade; and

(c) the trade carried on by the company, or a substantial part of it—

(i) is concerned with the same or similar types of property or parts thereof or provides the same or similar services or facilities; and

(ii) serves substantially the same or similar outlets or markets;

as the other trade or (as the case may be) the trade carried on by the other company.

(2) The date mentioned in sub-paragraph (1) above is—

(a) the date on which the shares are issued; or

(b) if later, the date on which the company begins to carry on the trade.

(3) For the purposes of sub-paragraph (1) above—

(a) the persons to whom a trade belongs, and (where a trade belongs to two or more persons) their respective shares in that trade, shall be determined in accordance with subsections (1)(a) and (b), (2) and (3) of section 253 of the Taxes Act; and

(b) any interest, rights or powers of a person who is an associate (as denned by section 67(1) of Chapter II) of another person shall be treated as those of that other person.

(4) For the purposes of this paragraph—

(a) references to a company's trade include references to the trade of any of its subsidiaries; and

(b) "trade", in the expressions "another trade", "other trade" and "trade carried on by the other company", includes any business, profession or vocation.”