Part V Transfer of business assets
F1Chapter IA Roll-over relief on re-investment
164GF1 Meaning of “qualifying company".
1
Subject to section 164H, a company is a qualifying company for the purposes of this Chapter if it complies with this section.
2
Subject to the following provisions of this section, a company complies with this section if it is—
a
an unquoted 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; F2or
aa
an unquoted company which is the parent company of a trading group.
3
A company does not comply with this section if—
a
it controls (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary or, without controlling it, has a 51 per cent. subsidiary which is not a qualifying subsidiary;
b
it is under the control of another company (or of another company and a person connected with the other company) or, without being controlled by it, is a 51 per cent. subsidiary of another company; or
c
arrangements are in existence by virtue of which the company could fall within paragraph (a) or (b) above;
and in this subsection “51 per cent. subsidiary” has the meaning given by section 838 of the Taxes Act.
F34
In this section “qualifying subsidiary”, in relation to a company (“the holding company”), means any company which is a member of a group of companies of which the holding company is the principal company.
4A
For the purposes of this section a company is the parent company of a trading group if—
a
it is the principal company of a group of companies; and
b
the requirements of subsection (4B) below are fulfilled by what would be the business of the company and its qualifying subsidiaries if all the activities, taken together, of the company and its qualifying subsidiaries were regarded as one business.
4B
A business fulfils the requirements of this subsection if—
a
it is carried on wholly or mainly in the United Kingdom; and
b
neither the business nor a substantial part of it consists in, or in either of, the following, that is to say—
i
activities falling within section 164I(2) but not within subsection (4C) below; and
ii
activities carried on otherwise than in the course of a trade.
4C
The activities falling within this subsection are—
a
the receiving of royalties or licence fees in circumstances where the requirements mentioned in paragraphs (a) and (b) of section 164I(5) or (6) are satisfied in relation to the company receiving them;
b
the letting of ships, other than oil rigs or pleasure craft, on charter in circumstances where the requirements mentioned in paragraphs (a) to (d) of section 164I(7) are satisfied in relation to the company so letting them.
4D
Activities of a company or of any of its qualifying subsidiaries shall be disregarded for the purposes of subsections (4A) to (4C) above to the extent that they consist in—
a
the holding of shares in or securities of, or the making of loans to, one or more of the company’s qualifying subsidiaries; or
b
the holding and managing of property used by the company or any of its qualifying subsidiaries for the purposes of—
i
research and development from which it is intended that a qualifying trade to be carried on by the company or any of its qualifying subsidiaries will be derived; or
ii
one or more qualifying trades so carried on.
4E
Activities of a qualifying subsidiary of a company shall also be disregarded for the purposes of subsections (4A) to (4C) above to the extent that they consist in—
a
the making of loans to the company; or
b
in the case of a mainly trading subsidiary, activities carried on in pursuance of its insignificant purposes (within the meaning given by subsection (4F) below).
4F
In subsection (4E) above “mainly trading subsidiary” means a qualifying subsidiary which, apart from purposes (“its insignificant purposes”) capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, exists wholly for the purpose of carrying on one or more qualifying trades.
6
Without prejudice to the generality of subsection (2) above or to section 164F(8), a company ceases to comply with this section if—
a
a resolution is passed, or an order is made, for the winding up of the company;
b
c
the company is dissolved without winding up.
Ss. 164A-164N (Pt. V, Ch. 1A) inserted (27.7.1993 with effect in relation to any disposal made on or after 16.3.1993 as mentioned in s. 87(2)) by 1993 c. 34, s. 87, Sch. 7 Pt. II para.3