Section 173AA — Income Tax Act 2007: Maximum risk finance investments at the issue date requirement

Maximum risk finance investments at the issue date requirement 173AA 1 The total amount of relevant investments made in the issuing company on or before the issue date must not exceed—

a if at the issue date the issuing company is a knowledge-intensive company (see section 252A) and—

i not a specified Northern Ireland company, £40 million;

ii a specified Northern Ireland company, £20 million, and b if at the issue date the issuing company is not a knowledge-intensive company and—

i not a specified Northern Ireland company, £24 million;

ii a specified Northern Ireland company, £12 million.

2 In subsection (1) the reference to relevant investments made in the issuing company includes—

a any relevant investment made in any company that at the issue date is, or has at any time before that date been, a 51% subsidiary of the issuing company (including investments made in such a company before it became such a subsidiary but, if it is not such a subsidiary at the issue date, not investments made in it after it last ceased to be such a subsidiary),

b any other relevant investment made in a company to the extent that the money raised by the investment has been employed for the purposes of a trade carried on by another company that has at any time before the issue date been a 51% subsidiary of the issuing company (but, if it is not such a subsidiary at that date, ignoring any money so employed after it last ceased to be such a subsidiary),

and c any other relevant investment made in a company if—

i the money raised by the investment has been employed for the purposes of a trade carried on by that company or another person, and ii after the investment was made, but on or before the issue date, that trade became a relevant transferred trade (see subsection (4)).

3 If only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a relevant transferred trade, the reference in subsection (2)(c) to the relevant investment is to be read as a reference to the corresponding proportion of that investment.

4 Where—

a at any time on or before the issue date, a trade is transferred—

i to the issuing company, ii to a company that at the issue date is, or has at any time before that date been, a 51% subsidiary of the issuing company, or iii to a partnership of which a company within sub-paragraph (i) or (ii) is a member, (including where it is transferred to a company within sub-paragraph (ii), or a partnership of which such a company is a member, before the company became such a subsidiary but, if the company is not such a subsidiary at the issue date, not where it is transferred to such a company or partnership after the company last ceased to be such a subsidiary),

and b the trade or a part of it was previously (at any time) carried on by another person, the trade or part mentioned in paragraph (b) becomes a “ relevant transferred trade ” at the time it is transferred as mentioned in paragraph (a).

5 In this section— “ the issue date ” means the date on which the relevant shares are issued; “ relevant investment ” has the meaning given by section 173A(3), and section 173A(4) and (5) (which determines when certain investments are made) applies for the purposes of this section; and section 173A(6) and (7) (meaning of “trade” etc ) applies for the purposes of this section as it applies for the purposes of section 173A.