Meaning of “qualifying subsidiary"U.K.
21(1)A company (“the subsidiary”) is a qualifying subsidiary of another company (“the relevant company”) if the following conditions are met.U.K.
(2)The conditions are that—
F1(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F2(ca)the subsidiary is a 51% subsidiary of the relevant company;]
(d)no person other than the relevant company or another of its subsidiaries has control of the subsidiary within the meaning of section 840 of the Taxes Act 1988; and
(e)no arrangements are in existence by virtue of which [F3either of the conditions in paragraphs (ca) and] (d) would cease to be met.
(3)The subsidiary shall not be regarded as ceasing to be a company in relation to which the conditions in sub-paragraph (2) are met by reason only of—
(a)anything done as a consequence of the subsidiary, or any other company, being in administration or receivership, or
(b)the subsidiary, or any other company, being wound up or dissolved without winding up,
if sub-paragraph (4) applies.
(4)This paragraph applies where—
(a)in a case within sub-paragraph (3)(a)—
[F4(i)the entry into administration or receivership, and]
(ii)everything done as a consequence of the company [F5concerned] being in administration or receivership, or
(b)in a case within sub-paragraph (3)(b), the winding up or dissolution,
is for commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(5)The subsidiary shall not be regarded, at any time when arrangements are in existence for the disposal by the relevant company or (as the case may be) by another subsidiary of that company of all its interest in the subsidiary in question, as having ceased on that account to be a qualifying subsidiary [F6of the relevant company] if the disposal is to be for commercial reasons [F7and is not to be part] of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.
Textual Amendments
F1Sch. 15 para. 21(2)(a)-(c) repealed (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(a), Sch. 42 Pt. 2(13)
F2Sch. 15 para. 21(2)(ca) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(b)
F3Words in Sch. 15 para. 21(2)(e) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(2)(c)
F4Sch. 15 para. 21(4)(a)(i) substituted (15.9.2003) by Enterprise Act 2002 (Insolvency) Order 2003 (S.I. 2003/2096), art. 1(1), Sch. para. 34(a) (with art. 6)
F5Word in Sch. 15 para. 21(4)(a)(ii) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(3)
F6Words in Sch. 15 para. 21(5) inserted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(4)(a)
F7Words in Sch. 15 para. 21(5) substituted (22.7.2004) (with effect in accordance with Sch. 20 para. 15 of the amending Act) by Finance Act 2004 (c. 12), Sch. 20 para. 5(4)(b)