C4C3C2C1F1PART 3ACompanies with small profits

Annotations:
Amendments (Textual)
F1

Pt. 3A inserted (with effect in accordance with Sch. 1 para. 34 of the amending Act) by Finance Act 2021 (c. 26), Sch. 1 para. 3

Modifications etc. (not altering text)
C2

Pt. 3A applied (with effect in accordance with Sch. 1 para. 33 of the amending Act) by 2001 c. 2, s. 99(4A) (as inserted by Finance Act 2021 (c. 26), Sch. 1 para. 16(3))

C1

Pt. 3A applied (with effect in accordance with Sch. 1 para. 33 of the amending Act) by S.I. 1998/3175, reg. 2(2A) (as inserted by Finance Act 2021 (c. 26), Sch. 1 para. 13(2)(c))

Supplementary

18MInterpretation of section 18L(3)

1

This section applies for the purposes of section 18L(3).

2

In addition to meeting the requirements of section 1154(2), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when—

a

B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and

b

B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up.

3

In determining whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not owning share capital if—

a

it owns the share capital indirectly,

b

the share capital is owned directly by a company (“D”), and

c

a profit on the sale of the shares would be a trading receipt for D.

4

A company is a “trading company” if its business consists wholly or mainly of carrying on one or more trades.

5

A company is a “relevant holding company” if its business consists wholly or mainly of holding shares in or securities of trading companies (as defined by subsection (4)) that are its 90% subsidiaries.

6

A company is a “quasi-subsidiary” of R if—

a

it is owned by a consortium of which R is a member,

b

it is not a 75% subsidiary of any company, and

c

no arrangements of any kind (whether in writing or not) exist as a result of which it could become a 75% subsidiary of any company.

7

A company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which—

a

beneficially owns at least 5% of that capital,

b

would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and

c

would be beneficially entitled to at least 5% of any asset of the company available for distribution to its equity holders on a winding up.

8

The companies meeting those conditions are called the members of the consortium.

9

Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of this section as it applies for the purposes of section 151(4)(a) and (b).