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HMRC internal manual

Venture Capital Schemes Manual

CVS: investors and reliefs: non-financial activities requirement: parent company

FA00/SCH15/PARA10 (3) & (4)(b)

The requirement in the case of a parent company is that the group of which it is the parent is a non-financial trading group. This will be the case if the business of the group, that is, all the activities of companies in the group taken together, are only of certain permitted kinds, or if those which are not do not comprise a substantial part (see VCM91170) of the business of the group.

The way this rule applies is as follows.

  1. The following types of activity are ignored for all purposes:
* the holding of shares in a subsidiary, and the making of loans to other group companies,
* the holding and managing of property used by any group company for the purposes of anon-financial trade (for definition see [VCM91140](,
* the holding by a group company of any shares to which investment relief is attributable, except where the holding of such shares amounts to a substantial part of the business of that company.

Everything else constitutes ‘the business of the group’.

  1. Any activities in the following categories must be identified:
* trades which are not non-financial trades,
* activities which are not trades.

Unless such activities together form a substantial part of the business of the group, the group is a non-financial trading group.