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HMRC internal manual

Venture Capital Schemes Manual

From
HM Revenue & Customs
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VCT: VCT qualifying holdings: meaning of 'qualifying 90% subsidiary'

ITA07/S301

For a subsidiary to be a qualifying 90% subsidiary, the relevant company must:

  • own at least 90% of the subsidiary’s issued share and voting rights,
  • be beneficially entitled to at least 90% of the assets available for distribution to equity holders of the subsidiary,
  • be beneficially entitled to at least 90% of any profits of the subsidiary which would be available for distribution to equity holders.

In addition, no person other than the relevant company must have control of the subsidiary, and there must be no arrangements by virtue of which any of the above conditions could cease to be met.

A company is still to be treated as a qualifying 90% subsidiary if it is held indirectly via a company which is a qualifying 100% subsidiary of the relevant company (based on similar considerations to those above).

Arrangements for the disposal of the subsidiary do not prevent this test from being regarded as met, providing that the disposal is for genuine commercial reasons and not for the purposes of tax avoidance.

The winding up of a subsidiary, or the subsidiary entering into or being in administration or receivership, do not prevent this test from being regarded as met providing that those events take place for genuine commercial reasons and not for the purposes of tax avoidance.

‘Equity holder’ is as defined in Chapter 6 of Part 5, CTA10 (see CTM81010).