PART VII GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS
C3CHAPTER IIIF1ENTERPRISE INVESTMENT SCHEME
Pt. 7 Ch. 3 applied (with effect in accordance with Sch. 13 para. 4(4) of the 1995 amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), Sch. 5B para. 6(4) (as inserted by Finance Act 1995 (c. 4), Sch. 13 para. 4(3))
C2293 Qualifying companies.
F41
Subject to section 294, a company is a qualifying company (whether it is resident in the United Kingdom or elsewhere) if it complies with the requirements of this section.
2
The company must, throughout the relevant period, be an unquoted company and be—
a
a company which exists wholly for the purpose of carrying on one or more qualifying trades or which so exists apart from purposes capable of having no significant effect (other than in relation to incidental matters) on the extent of the company’s activities, or
b
a company whose business consists wholly of—
i
the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company, or
ii
both the holding of such shares or securities, or the making of such loans, and the carrying on of one or more qualifying trades.
3
In this section “qualifying subsidiary”, in relation to a company, means a subsidiary of a kind which that company may hold by virtue of section 308.
F24
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C15
M1Without prejudice to the generality of subsection (2) above, but subject to subsection (6) below, a company ceases to comply with that subsection if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the M2Insolvency Act 1986 or the M3Companies (Northern Ireland) Order 1986, any other act is done for the like purpose) or the company is dissolved without winding up.
6
A company shall not be regarded as ceasing to comply with subsection (2) above if it does so by reason of being wound up or dissolved without winding up and—
a
it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax; and
b
the company’s net assets, if any, are distributed to its members or dealt with as bona vacantia before the end of the relevant period or, in the case of a winding up, the end (if later) of three years from the commencement of the winding up.
7
The company’s share capital must not, at any time in the relevant period, include any issued shares that are not fully paid up F6or would not be fully paid up if any undertaking to pay cash to the company at a future date were disregarded.
F78
Subject to section 308, the company must not—
a
at any time in the relevant period control (or together with any person connected with it control) another company or be under the control of another company (or another company and any other person connected with that other company), or
b
at any such time be a 51 per cent. subsidiary of another company or itself have a 51 per cent. subsidiary,
and no arrangements must be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b) above.
8A
Section 312(1A)(b) applies to determine the relevant period for the purposes of this section and sections 294, 295 and 296.
F39
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F310
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F311
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pt. 7 Ch. 3 heading substituted (with effect in accordance with s. 137(2) of the amending Act) by Finance Act 1994 (c. 9), s. 137(1), Sch. 15 para. 2