[F1[F223(1)This Schedule has effect subject to the following provisions where a company (“the investing company”) has a qualifying shareholding in a joint venture company.U.K.
(2)For the purposes of this paragraph a company is a “joint venture company” if, and only if—
(a)it is a trading company or the holding company of a trading group, and
(b)75% or more of its ordinary share capital (in aggregate) is held by not more than five companies.
For the purposes of paragraph (b) above the shareholdings of members of a group of companies shall be treated as held by a single company.
(3)For the purposes of this paragraph a company has a “qualifying shareholding” in a joint venture company if—
(a)it holds more than 30% of the ordinary share capital of the joint venture company, or
(b)it is a member of a group of companies, it holds ordinary share capital of the joint venture company and the members of the group between them hold more than 30% of that share capital.
(4)For the purpose of determining whether the investing company is a trading company—
(a)any holding by it of shares in the joint venture company shall be disregarded, and
(b)it shall be treated as carrying on an appropriate proportion—
(i)of the activities of the joint venture company, or
(ii)where the joint venture company is the holding company of a trading group, of the activities of that group.
This sub-paragraph does not apply if the investing company is a holding company.
(5)For the purpose of determining whether the investing company is a holding company—
(a)any holding by it of shares in the joint venture company shall be disregarded, and
(b)it shall be treated as carrying on an appropriate proportion of the activities—
(i)of the joint venture company, or
(ii)where the joint venture company is the holding company of a trading group, of that group.
This sub-paragraph does not apply if the joint venture company is a 51 per cent subsidiary of the investing company.
(6)For the purpose of determining whether a group of companies is a trading group—
(a)every holding of shares in the joint venture company by a member of the group having a qualifying shareholding in that company shall be disregarded, and
(b)each member of the group having such a qualifying shareholding shall be treated as carrying on an appropriate proportion of the activities—
(i)of the joint venture company, or
(ii)where the joint venture company is the holding company of a trading group, of that group.
This sub-paragraph does not apply if the joint venture company is a member of the group.
(7)In sub-paragraphs (4)(b), (5)(b) and (6)(b) above “an appropriate proportion” means a proportion corresponding to the percentage of the ordinary share capital of the joint venture company held by the investing company or, as the case may be, by the group member concerned.
F3(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)The acquisition by the investing company of the qualifying shareholding shall not be treated as a relevant change of activity for the purposes of paragraph 11 above.
(10)For the purposes of this paragraph “ordinary share capital” has the meaning given by section 832(1) of the Taxes Act.]]
Textual Amendments
F1Sch. A1 inserted (with effect in accordance with s. 121(4) of the amending Act) by Finance Act 1998 (c. 36), s. 121(2), Sch. 20
F2Sch. A1 para. 23 and cross-heading inserted (with effect in accordance with s. 67(7) of the amending Act) by Finance Act 2000 (c. 17), s. 67(6)
F3Sch. A1 para. 23(8) repealed (with effect in accordance with s. 78(2), Sch. 33 Pt. 2(7) Note of the amending Act) by Finance Act 2001 (c. 9), Sch. 26 para. 6(2), Sch. 33 Pt. 2(7) (with Sch. 3)