SCHEDULES

SCHEDULE 2Transitionals and savings

Part 8Venture capital trusts

Excluded activities: receipt of royalties and licence fees

84

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 306 applies in relation to shares or securities issued before 6 April 2000 with the substitution for subsections (2) to (6) of—

2

If the requirement of subsection (3) or (4) is met, a trade is not to be regarded as consisting in the carrying on of excluded activities within section 303(1)(e) as a result only of its consisting to a substantial extent in the receiving of royalties of licence fees.

3

The requirement of this subsection is that—

a

the company carrying on the trade is engaged in—

i

the production of films, or

ii

the production of films and the distribution of films produced by it since the issue of the relevant holding, and

b

all royalties and licence fees received by it are in respect of—

i

films produced by it since the issue of the relevant holding,

ii

sound recordings in relation to such films, or

iii

other products arising from such films.

4

The requirement of this subsection is that—

a

the company carrying on the trade is engaged in research and development, and

b

all royalties and licence fees received by it are attributable to research and development which it has carried out.