10U.K.After section 299 insert—
“299AThe no disqualifying arrangements requirement
(1)The relevant holding must not have been issued, nor any money raised by the issue employed, in consequence or anticipation of, or otherwise in connection with, disqualifying arrangements.
(2)Arrangements are “disqualifying arrangements” if—
(a)the main purpose, or one of the main purposes, of the arrangements is to secure—
(i)that a qualifying activity is or will be carried on by the relevant company or a qualifying 90% subsidiary of that company, and
(ii)that shares or securities issued by the relevant company may be comprised in any company's qualifying holdings or that one or more persons may obtain relevant tax relief in respect of such shares which raise money for the purposes of that qualifying activity,
(b)that qualifying activity is the relevant qualifying activity by reference to which the requirement in section 293(1)(b) (money raised to be employed within two years for relevant qualifying activity) is met in relation to the relevant holding, and
(c)one or both of conditions A and B are met.
(3)Condition A is that, as a (direct or indirect) result of the money raised by the issue of the relevant holding being employed as required by section 293(1)(b), an amount representing the whole or the majority of the amount raised is, in the course of the arrangements, paid to or for the benefit of a relevant person or relevant persons.
(4)Condition B is that, in the absence of the arrangements, it would have been reasonable to expect that the whole or greater part of the component activities of the relevant qualifying activity would have been carried on as part of another business by a relevant person or relevant persons.
(5)For the purposes of this section it is immaterial whether the relevant company is a party to the arrangements.
(6)In this section—
“component activities” means—
(a)if the relevant qualifying activity is within section 291(2), the carrying on of a qualifying trade which constitutes that activity, and
(b)if the relevant qualifying activity is within section 291(3), the preparations to carry on a qualifying trade which constitute that activity;
“arrangements” includes any scheme, agreement, understanding, transaction or series of transactions (whether or not legally enforceable);
“relevant person” means a person who is a party to the arrangements or a person connected with such a party;
“qualifying activity” has the same meaning as in section 291;
“relevant tax relief”, in respect of shares, means one or more of the following—
(a)relief under Chapter 6 of Part 4 (losses on disposal of shares) in respect of the shares;
(b)EIS relief (within the meaning of Part 5) in respect of the shares;
(c)SEIS relief (within the meaning of Part 5A) in respect of the shares;
(d)relief under section 150A or 150E of TCGA 1992 (enterprise investment scheme and seed enterprise investment scheme) in respect of the shares;
(e)relief under Schedule 5B to that Act in consequence of which deferral relief is attributable to the shares;
(f)relief under Schedule 5BB to that Act (seed enterprise investment scheme: re-investment) in consequence of which SEIS re-investment relief is attributable to the shares (see paragraph 4 of that Schedule).”