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Finance (No. 2) Act 2015

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4(1)Section 280B (the investment limits condition) is amended as follows.E+W+S+N.I.

(2)In subsection (2) for the words from “if” to the end substitute if one or more of the following applies—

(a)the total annual investment in the relevant company exceeds the amount for the time being specified in section 292A(1);

(b)the total investment in the relevant company at the investment date exceeds the amount specified in—

(i)if the relevant company is a knowledge-intensive company (see section 331A) at the investment date, section 292AA(1)(a), and

(ii)in any other case, section 292AA(1)(b);

(c)condition A or B is met and the total investment in the relevant company at any time during the 5-year post-investment period exceeds the amount specified in—

(i)if the relevant company is a knowledge-intensive company at the investment date, section 292AB(4)(a), and

(ii)in any other case, section 292AB(4)(b).

(3)After subsection (2) insert—

(2A)In this section—

  • the investment date” means the date the current investment is made;

  • the 5-year post-investment period” means the period of 5 years beginning with the day after the investment date.

(4)For subsection (3) substitute—

(3)For the purposes of subsection (2)(a), the total annual investment in the relevant company is the sum of—

(a)the amount of the current investment,

(b)the total amount of other relevant investments made (whether or not by the investor), in the year ending with the day on which the current investment is made, in—

(i)the relevant company, or

(ii)a company that has at any time in that year been a 51% subsidiary of the relevant company,

(including investments made in such a company before it became such a subsidiary but, if it is not such a subsidiary at the end of that year, not investments made in it after it last ceased to be such a subsidiary), and

(c)the total amount of any other relevant investments (whether or not made by the investor) which are relevant imported investments.

(3A)For the purposes of subsection (2)(b), the total investment in the relevant company at the investment date is the sum of—

(a)the amount of the current investment,

(b)the total amount of other relevant investments made (whether or not by the investor), on or before the investment date, in—

(i)the relevant company, or

(ii)a company that is at the investment date, or has at any time before that date been, a 51% subsidiary of the relevant company,

(including investments made in such a company before it became such a subsidiary but, if it is not such a subsidiary at the investment date, not investments made in it after it last ceased to be such a subsidiary), and

(c)the total amount of any other relevant investments (whether or not made by the investor) which are relevant imported investments.

(3B)For the purposes of subsection (2)(c)—

(a)condition A is that—

(i)a company becomes a 51% subsidiary of the relevant company during the 5-year post-investment period,

(ii)all or part of the money raised by the current investment is employed for the purposes of an activity which consists wholly or in part of a trade carried on by that company, and

(iii)that trade (or a part of it) was carried on by that company before it became a 51% subsidiary as mentioned in sub-paragraph (i);

(b)condition B is that all or part of the money raised by the current investment is employed for the purposes of an activity which consists wholly or in part of a trade which, during the 5-year post-investment period, becomes a relevant transferred trade (see subsection (3F).

(3C)For the purposes of subsection (2)(c), the total investment in the relevant company at a time during the 5-year post-investment period (“the relevant time”) is the sum of—

(a)the amount of the current investment,

(b)the total amount of other relevant investments made, before the relevant time (whether or not by the investor), in—

(i)the relevant company, or

(ii)a company that at the relevant time is, or before that time has been, a 51% subsidiary of the relevant company,

(including investments made in such a company before it became such a subsidiary but, if it is not such a subsidiary at the relevant time, not investments made in it after it last ceased to be such a subsidiary), and

(c)the total amount of any other relevant investments (whether or not made by the investor) which are relevant imported investments.

(3D)In this section “relevant imported investment” means—

(a)a relevant investment

(i)which is made in a company at a qualifying time, and

(ii)the money raised by which is employed for the purposes of a trade carried on by another company that is, at a qualifying time, a 51% subsidiary of the relevant company (but, if at the latest possible qualifying time it has ceased to be such a subsidiary, ignoring any money so employed after it last ceased to be such a subsidiary), or

(b)a relevant investment—

(i)which is made in a company at a qualifying time, and

(ii)the money raised by which is employed for the purposes of a trade carried on by that company or another person,

where, at a qualifying time but after that investment was made, that trade (or a part of it) became a relevant transferred trade (see subsection (3F)).

(3E)In subsection (3D) “a qualifying time” means—

(a)for the purposes of subsection (3), any time in the year mentioned in that subsection,

(b)for the purposes of subsection (3A), any time on or before the investment date,

(c)for the purposes of subsection (3C), any time before the relevant time.

(3F)For the purposes of this section if—

(a)a trade is transferred—

(i)to the relevant company,

(ii)to a company that is a 51% subsidiary of the relevant company, or

(iii)to a partnership of which a company within sub-paragraph (i) or (ii) is a member,

(including where it is transferred to a company within sub-paragraph (ii), or a partnership of which such a company is a member, before the company became such a subsidiary), and

(b)the trade, or a part of it, was previously (at any time) carried on by another person,

the trade or part mentioned in paragraph (b) becomes a “ relevant transferred trade ” at the time it is transferred as mentioned in paragraph (a).

(5)In subsection (4)—

(a)omit “or” at the end of paragraph (b) and after that paragraph insert—

(ba)an investment is made in the company and (at any time) the company provides a compliance statement under section 257PB (tax relief for social investments) in respect of the investment, or, and

(b)in paragraph (c) for “Community Guidelines on Risk Capital Investments in Small and Medium-sized Enterprises” substitute “ European Commission's Guidelines on State aid to promote risk finance investment ”.

(6)In subsection (5) for “and (3)” substitute “ to (3E) ”.

(7)After subsection (5) insert—

(6)Section 257KB applies in determining for those purposes when an investment within subsection (4)(ba) is made as it applies for the purposes of Part 5B (tax relief on social investments).

(7)If only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which became a relevant transferred trade as mentioned in subsection (3D), only the corresponding proportion of the relevant investment falls within that subsection.

(8)For the purposes of this section—

(a)references to a trade include a part of a trade (and references to the carrying on of a trade are to be construed accordingly), and

(b)when determining the amount of money raised by a relevant investment which has been employed for the purposes of a trade such apportionments are to be made as are just and reasonable.

(9)In this section “trade” includes—

(a)any business or profession,

(b)so far as not within paragraph (a), the carrying on of research and development activities from which it is intended a trade will be derived or will benefit, and

(c)preparing to carry on a trade.

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