Section 26: Section 25(3): treatment of certain non-trading companies
106.This section is the rule that passive non-trading companies are ignored as associated companies. It is new. See Change 2 in Annex 1.
107.Subsection (1) sets out the three conditions for the treatment in the section. The first two conditions reproduce the main words of SP5/94. The third condition introduces the concept of a “passive company”, defined in subsection (3).
108.Subsection (2) is the result if the conditions are met: the company is treated as being within section 25(3) and is ignored for the purposes of claims for small profits rate by any company with which it is associated.
109.Subsection (3) reproduces the conditions in SP5/94 for a company to qualify as a passive company.See Change 2 in Annex 1 for a fuller discussion of the conditions.
110.Subsection (4) sets out the condition that any dividends received from subsidiaries are distributed in full by the holding company.
111.Subsection (5) makes clear that a company that receives, or is due to receive, a dividend is not treated on that ground alone as having assets.
