Finance Act 2000

8 (1) The investing company must not, at any time during the qualification period relating to those shares, control the issuing company.

(2) For this purpose the question whether the investing company controls the issuing company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988 with the following modifications.

(3) The first modification is that, in determining whether the investing company controls the issuing company, there shall be disregarded—

(a) its or any other person’s possession of, or entitlement to acquire, relevant preference shares of the issuing company; and

(b) its or any other person’s possession of, or entitlement to acquire, rights as a loan creditor of the issuing company.

(4) For the purposes of sub-paragraph (3) a person is a “loan creditor” of a company if the person is a creditor in respect of the loan capital of that company (within the meaning of paragraph 7(3)).

(5) The second modification is that in determining whether the conditions of section 416(2) of that Act are satisfied there shall be attributed to the investing company (to the extent that it would not otherwise be the case) any rights or powers in the issuing company, or any of its subsidiaries, that are held by—

(a) any person connected with the investing company; or

(b) any person who is—

(i) a director of the investing company, or of any company connected with that company, or

(ii) a relative of such a director.

For this purpose “relative” means husband or wife, parent or remoter forebear or child or remoter issue.