Taxation of Chargeable Gains Act 1992 section 23

Treatment of holdings in joint venture companies [TCGA 1992 Sch 7AC para 23]

Section 23 sets out how holdings in joint venture companies are treated when determining whether a company, group or subgroup qualifies as a trading company, trading group or trading subgroup for the purposes of the substantial shareholding exemption.

• When assessing trading status, a company's shareholding in a joint venture is disregarded and the company is instead treated as carrying on a proportionate share of the joint venture's activities, based on its percentage of ordinary share capital held
• Similar look-through treatment applies at group level: all group members' holdings in the joint venture are disregarded and each member with a qualifying shareholding is treated as conducting its proportionate share of the joint venture's activities
• For trading subgroup purposes, holdings by the company and its 51% subsidiaries are disregarded and replaced with proportionate shares of the joint venture's activities, unless the joint venture is a member of the same group
• Where the joint venture is itself a holding company, its activities and those of its 51% subsidiaries are treated as a single business, with intra-group or intra-subgroup activities stripped out