2

In subsection (1), the reference to relevant investments made in the issuing company includes—

a

a relevant investment made in any company that has at any time in the year mentioned there been a 51% subsidiary of the issuing 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 those made after it last ceased to be such a subsidiary),

b

any other relevant investment made in a company to the extent that the money raised by the investment has been employed for the purposes of a trade carried on by another company that has at any time in that year been a 51% subsidiary of the issuing company (but, if it is not such a subsidiary at the end of that year, ignoring any money so employed after it last ceased to be such a subsidiary), and

c

any other relevant investment made in a company if—

i

the money raised by the investment has been employed for the purposes of a trade carried on by that company or another person, and

ii

in that year, after the investment was made, the trade (or a part of it) became a relevant transferred trade (see subsection (2B)).

2A

If only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a relevant transferred trade, the reference in subsection (2)(c) to the relevant investment is to be read as a reference to the corresponding proportion of that investment.

2B

Where—

a

in the year mentioned in subsection (1) a trade is transferred—

i

to the issuing company,

ii

to a company that has at any time during that year been a 51% subsidiary of the issuing 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, in that year before the company became such a subsidiary but, if the company is not such a subsidiary at the end of that year, not where it is transferred to such a company or partnership after the company last ceased to be such a subsidiary), and

b

that 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

Section 257KB applies in determining for those purposes when an investment within subsection (3)(ba) is made as it applies for the purposes of Part 5B (tax relief on social investments).

6

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);

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.

7

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.