Part 5 Group relief

Chapter 5 Subsidiaries, groups and consortiums

Explanations of terms

151 Meaning of “75% subsidiary” and “90% subsidiary”
(1) In this Part “75% subsidiary” and “90% subsidiary” are to be read in accordance with Chapter 3 of Part 24, but subject to subsections (2) to (4).
(2) In applying the definition of “75% subsidiary” in section 1154(3), share capital of a registered industrial or provident society is to be treated as if it were ordinary share capital.
(3) If—
(a) a company (“the shareholder”) directly owns shares in another company, and
(b) a profit on the sale of those shares would be a trading receipt of the shareholder,
the shareholder is treated as not being the owner of those shares for the purpose of determining if any company is a 75% subsidiary of any other company.
(4) If a company (“the subsidiary”) would, apart from this subsection, be treated as a 75% or 90% subsidiary of another company (“the parent”) at any time, the subsidiary is not to be so treated unless at that time the parent—
(a) is beneficially entitled to at least 75% or 90% (as the case may be) of any profits available for distribution to equity holders of the subsidiary (see Chapter 6), and
(b) would be beneficially entitled to at least 75% or 90% (as the case may be) of any assets of the subsidiary available for distribution to such equity holders on a winding up (see Chapter 6).