Taxation of Chargeable Gains Act 1992 Schedule 7ZA paragraphs 9–12

Voting rights test

Section 9–12 of Schedule 7ZA sets out how to determine whether a person (P) passes the voting rights test in relation to a joint venture company, by combining direct and indirect voting rights and applying a minimum 5% threshold.

• P passes the voting rights test if, throughout the relevant period, the sum of P's direct and indirect voting rights in the joint venture company is at least 5%.
• Indirect voting rights are calculated by reference to each investing company through which P holds an interest, using the formula T × U × 100 (where T is P's fraction of voting rights in the investing company and U is the investing company's fraction of voting rights in the joint venture company).
• Where there are multiple investing companies, the indirect voting rights percentages through each are added together to give the total indirect voting rights percentage.
• Special assumptions apply when calculating indirect holdings: if an investing company or a fellow group member directly holds more than 50% of the voting rights in another company, it is treated as holding all of the voting rights in that company.