PART 1

Direct taxes

Income tax: investments

Business investment relief
15
1
Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.
2
In section 809VC (qualifying investments), in subsection (1)(a), after “issued to” insert “ or acquired by ”.
3
In section 809VD (condition relating to qualifying investments)—
a
in subsection (1), omit the “or” at the end of paragraph (b) and after that paragraph insert—
ba
an eligible hybrid company, or
;
b
in subsection (2)(b), for “2” substitute “ 5 ”;
c
in subsection (3)(c), for “2” substitute “ 5 ”;
d
after subsection (3) insert—
3A
A company is an “eligible hybrid company” if—
a
it is a private limited company,
b
it is not an eligible trading company or an eligible stakeholder company,
c
it carries on one or more commercial trades or is preparing to do so within the next 5 years,
d
it holds one or more investments in eligible trading companies or is preparing to do so within the next 5 years, and
e
carrying on commercial trades and making investments in eligible trading companies are all or substantially all of what it does (or of what it is reasonably expected to do once it begins operating).
;
e
in subsection (4), for “reference in subsection (3)” substitute “ references in subsections (3) and (3A) ”;
f
in subsection (5)(a), for “2” substitute “ 5 ”.
4
In section 809VE (commercial trades), after subsection (5) insert—
6
A company which is a partner in a partnership is not to be regarded as carrying on a trade carried on by the partnership.
5
In section 809VH (meaning of “potentially chargeable event”)—
a
in subsection (1)(a), after “eligible stakeholder company” insert “ nor an eligible hybrid company ”;
b
in subsection (1)(d), for “2-year” substitute “ 5-year ”;
c
in subsection (2), for paragraph (b) substitute—
b
the value is received from any person in circumstances that are directly or indirectly attributable to the investment, and
;
d
omit subsection (4);
e
in subsection (5)—
i
for “2-year” substitute “ 5-year ”;
ii
in paragraph (a), for “2” substitute “ 5 ”;
f
in subsection (6), omit the “or” at the end of paragraph (b) and after that paragraph insert—
ba
it is an eligible hybrid company but is not trading and—
i
it holds no investments in eligible trading companies, or
ii
none of the eligible trading companies in which it holds investments is trading, or
;
g
in subsection (10)(b), after “eligible stakeholder company” insert “ or an eligible hybrid company ”.
6
In section 809VJ (grace period), after subsection (2) insert—
2A
But subsection (2B) applies instead of subsections (1) and (2) where the potentially chargeable event is a breach of the 5-year start-up rule by virtue of section 809VH(5)(b).
2B
The grace period allowed for the steps mentioned in section 809VI(2)(a) and (2)(b) is the period of 2 years beginning with the day on which a relevant person first became aware or ought reasonably to have become aware of the potentially chargeable event referred to in subsection (2A).
7
In section 809VN (order of disposals etc), in subsections (1)(c) and (5)(a) and (b), after “eligible stakeholder company” insert “ or eligible hybrid company ”.
8
The amendments made by this section have effect where the relevant event as defined in section 809VA of ITA 2007 occurs on or after 6 April 2017.