Taxation in the United Kingdom/Legislation/Section 13ZA of the Income and Corporation Taxes Act 1988

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This Section gives some interpretative provisions for Section 13(7) of ICTA.

Subsection (1) provides that in determining whether a body corporate is a 51% subsidiary of another, the other isn't treated as being the owner of any share capital which is owned indirectly and is part of the trading portfolio of the body corporate directly owning it.

Subsection (2) provides that you only consider something to be a 51% subsidiary if the parent company is beneficially entitled to more than 50% of profits on a distribution and more than 50% of assets on a winding-up.

Subsection (3) makes a number of definitions for the purposes of Section 13(7) and this Section:

Trading or holding company is a trading company or a company whose business is wholly or mainly the holding of shares in 90% subsidiaries which are trading companies.

Trading company is a company whose business is wholly or mainl the carrying on of a trade or trades.

A company is owned by a consortium if 75% or more of the ordinary share capital is beneficially owned by that company together with companies that beneficially own at least 5% of the ordinary share capital, that would be beneficially entitled to at least 5% of profits on a distribution, or would be beneficially entitled to at least 5% of assets on a winding up. In that instance, those companies are called the members of the consortium.

Subsection (4) provides that Schedule 18 to ICTA applies for the purposes of Subsection (2) and the provisions relating to the definition of a consortium in Subsection (3) as it applies for the purposes of Section 413(7) of ICTA (ie for the purposes of group relief.