BLM80345 - Sale of lessor companies and similar arrangements: establishing change of ownership: meaning of 75% or 90% subsidiary etc (FA06/SCH10/PARA15)

The meaning of 75% or 90% subsidiary for the purposes of the sale of lessors legislation does not just look at share capital.

Where the company has share capital the legislation imports the meanings of 75% and 90% subsidiary from section 838 ICTA 1988.

Where the company has no share capital the legislation builds on the section 840 ICTA 1988 meaning of control but looks for beneficial entitlement to an appropriate proportion of:

• profits available for distribution; and
• assets which would be available for distribution on a winding up.

The appropriate proportion is at least 75%.

The rules at ICTA88/SCH18 (Group Relief: Equity Holders and Profits or Assets Available For Distribution) apply so that the concept of a 75% subsidiary for these purposes is aligned with the concept of a 75% subsidiary for the purposes of group relief. These rules are adapted to accommodate companies with no share capital. See BLM80350.