Part 3Income tax, corporation tax and capital gains tax
Other income tax measures
61Enterprise management incentives: excluded activities
1
In Part 3 of Schedule 5 to ITEPA 2003 (enterprise management incentives: qualifying companies), in paragraph 19 (excluded activities: receipt of royalties or licence fees)—
a
in sub-paragraph (4), for paragraphs (a) and (b) substitute—
a
by the relevant company, or
b
by a company which was a qualifying subsidiary of the relevant company throughout a period during which it created the whole or greater part (in terms of value) of the intangible asset.
b
after sub-paragraph (7) insert—
8
If—
a
the relevant company acquired all the shares (“old shares”) in another company (“the old company”) at a time when the only shares issued in the relevant company were subscriber shares, and
b
the consideration for the old shares consisted wholly of the issue of shares in the relevant company,
references in sub-paragraph (4) to the relevant company include the old company.
2
The amendments made by subsection (1) have effect in relation to options granted on or after 6th April 2007.
3
They also have effect in relation to a qualifying option within subsection (4), for the purpose of determining at any time on or after that date whether an activity is an excluded activity.
4
An option is within this subsection if it was granted before 6th April 2007 and, immediately before that date—
a
it had not been exercised, and
b
no disqualifying event had occurred in relation to it.
5
Subsection (6) applies in respect of an option within subsection (4) if—
a
immediately before 6th April 2007—
i
the right to exploit an intangible asset (“the asset”) was vested in the relevant company or a subsidiary of it (in either case, alone or jointly with others), and
ii
the asset was a relevant intangible asset,
b
at any time on or after that date, an activity carried on by the relevant company or a subsidiary of it would be an excluded activity by reason only of the receipt of royalties or licence fees attributable to the exploitation of the asset, and
c
the activity would not be an excluded activity if the amendments made by subsection (1) had not been made.
6
The activity is to be treated, in relation to the option, as not being an excluded activity at that time.