Section 257MU — Finance Act 2014: Meaning of “qualifying subsidiary”

Meaning of “qualifying subsidiary” 257MU 1 For the purposes of this Part, a company (“the subsidiary”) is a qualifying subsidiary of another company (“the parent”) if—

a the subsidiary is a 51% subsidiary of the parent, b no person other than the parent, or another of its subsidiaries, has control of the subsidiary, and c no arrangements are in existence as a result of which either of the conditions in paragraphs (a) and (b) would cease to be met.

2 The conditions in subsection (1)(a) to (c) do not cease to be met merely because the subsidiary or any other company is wound up, or dissolved without winding up, if the winding-up or dissolution—

a is for genuine commercial reasons, and b is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.

3 The conditions in subsection (1)(a) to (c) do not cease to be met merely because of anything done as a consequence of the subsidiary or another company being in administration, or receivership, if—

a the entry into administration or receivership, and b everything done as a consequence of the company concerned being in administration or receivership, is for genuine commercial reasons, and is not part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.

4 The conditions in subsection (1)(a) to (c) do not cease to be met merely because arrangements are in existence for the disposal by the parent or (as the case may be) by another subsidiary of all its interest in the subsidiary if the disposal—

a is to be for genuine commercial reasons, and b is not to be part of any arrangements the main purpose or one of the main purposes of which is the avoidance of tax.