Corporation Tax Act 2010 section 398

"Qualifying 75% subsidiary" etc.

Section 398 defines what makes a company a "qualifying 75% subsidiary" of another company for the purposes of the sales of lessors provisions in the Corporation Tax Act 2010.

• A subsidiary with ordinary share capital qualifies if it is a 75% subsidiary of the parent; a subsidiary without ordinary share capital qualifies if the parent has control of it
• In both cases, the parent must also be beneficially entitled to at least 75% of the subsidiary's distributable profits and at least 75% of its assets on a winding up
• The rules for identifying equity holders and measuring distributable profits and assets follow the same framework used for group relief purposes
• Where a subsidiary has no ordinary share capital (for example, a company limited by guarantee), its members are treated as if they were equity holders for the purpose of applying these tests