Income Tax Act 2007

175 The use of the money raised requirement

(1) The requirement of this section is that—

(a) at least 80% of the money raised by the issue of—

(i) the relevant shares (other than any of them which are bonus shares), and

(ii) all other shares (if any) in the company of the same class which meet the requirements of section 173(2) and are issued on the same day,

is employed wholly for the purpose of the qualifying business activity for which it was raised not later than the time mentioned in subsection (3), and

(b) all of the money so raised is employed wholly for that purpose not later than 12 months after that time.

(2) The requirements in subsection (1)(a) and (b) do not fail to be met merely because an amount of money which is not significant is employed for another purpose.

(3) The time referred to in subsection (1)(a) is—

(a) the end of the period of 12 months beginning with the issue of the shares, or

(b) in the case of money raised only for the purpose of an activity to which section 179(2) applies, the end of the period of 12 months beginning with—

(i) the issue of the shares, or

(ii) if later, the time when the company or a qualifying 90% subsidiary of the company begins to carry on the qualifying trade.

(4) In determining for the purposes of subsection (3)(b) when a qualifying trade is begun to be carried on by a qualifying 90% subsidiary of a company, any carrying on by it of the trade before it became such a subsidiary is ignored.