Commentary

D1.1071 Additional requirements of the substantial shareholding exemption relating to the investing company for pre-1 April 2017 disposals

Corporate tax
Corporate tax | Commentary

D1.1071 Additional requirements of the substantial shareholding exemption relating to the investing company for pre-1 April 2017 disposals

Corporate tax | Commentary

D1.1071 Additional requirements of the substantial shareholding exemption relating to the investing company for pre-1 April 2017 disposals

The provisions in this article were repealed for disposals on or after 1 April 2017. From this date, there are no requirements relating to the investing company for the purpose of the substantial shareholding exemption (SSE).

Before the changes made by F(No 2)A 2017 with effect for disposals on or after 1 April 2017, the substantial shareholding exemption (SSE) legislation set out certain conditions which had to be met by the investing company. Broadly, these required trading status throughout a specified period.

Specifically, the investing company must have been either a sole trading company (that is not a member of a group1) or a member of a qualifying group:

  1.  

    •     throughout the qualifying period2, and

  2.  

    •     immediately after the time of the disposal3

The terms used are defined in the legislation.

The reference to a sole trading company was effectively for an investing company that held less than a controlling 51% interest in the target company and had no other subsidiary companies. Such companies are very rarely encountered. Thus, although the legislation included the possibility of a trading company being the investing company, in reality the investing company invariably was a member of a trading group.

Where a sole trading company with shares in the target company acquired a subsidiary company or otherwise became a member of a group at some later point, the change of status from sole trading company to member of a

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