Section 257MNB — Income Tax Act 2007: Section 257MNA: supplementary

Section 257MNA: supplementary 257MNB 1 In section 257MNA(2) the reference to relevant investments “ made in the social enterprise ” includes—

a relevant investments made in a company which, at the material date, is or has been a 51% subsidiary of the social enterprise, b any other relevant investment made in a company to the extent that the money raised by that relevant investment has been employed for the purposes of a trade carried on by another company (“company X”) which, at the material date, is or has been a 51% subsidiary of the social enterprise, and c any other relevant investment made in a company if—

i the money raised by that relevant investment has been employed for the purposes of a trade carried on by that company or another person, and ii after that relevant investment was made, but on or before the material date, that trade became a transferred trade (see subsection (5)).

2 The investments within paragraph (a) of subsection (1)—

a include investments made in a company mentioned in that paragraph before it became a 51% subsidiary of the social enterprise, but b where a company mentioned in that paragraph is not a 51% subsidiary of the social enterprise at the material date, do not include any investments made in that company after it last ceased to be such a subsidiary.

3 For the purposes of subsection (1)(b), where company X is not a 51% subsidiary of the social enterprise at the material date, any money employed after company X last ceased to be such a subsidiary is to be ignored.

4 Where only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a transferred trade, only the corresponding proportion of that relevant investment is to be treated as falling within subsection (1)(c).

5 For the purposes of this section, if—

a on or before the material date a trade is transferred—

i to the social enterprise, ii to a company which, at the material date, is or has been a 51% subsidiary of the social enterprise, or iii to a partnership of which the social enterprise, or a company within sub-paragraph (ii), is a member, and b the trade or part of it was at any time before the transfer carried on by another person, the trade or part mentioned in paragraph (b) becomes a “ transferred trade ” when it is transferred as mentioned in paragraph (a).

6 The cases within subsection (5)(a)—

a include the case where the trade is transferred to a company within subsection (5)(a)(ii), or a partnership of which such a company is a member, before the company became a 51% subsidiary of the social enterprise, but b where a company within subsection (5)(a)(ii) is not a 51% subsidiary of the social enterprise at the material date, do not include the case where the trade is transferred to that company, or a partnership of which that company is a member, after that company last ceased to be such a subsidiary.

7 In this section— “ the material date ” means the date on which the investment is made; “ relevant investment ” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).

8 Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.

9 Section 173A(6) and (7) (meaning of “trade” etc ) apply also for the purposes of this section.