1(1)In subsection (1) of section 289 of the Taxes Act 1988—
(a)in paragraph (a), after the words “has subscribed” there shall be inserted the words “wholly in cash”;
(b)after that paragraph there shall be inserted the following paragraph—
“(aa)at the time when they are issued the shares are fully paid up (disregarding for this purpose any undertaking to pay cash to the company at a future date),”;
(c)in paragraph (b), after the words “the shares” there shall be inserted the words “and all other shares comprised in the same issue”; and
(d)in paragraph (c), for the words “that activity” there shall be substituted the words “the activity mentioned in paragraph (b) above”.
(2)In subsection (1A)(c) of that section, for the word “subsidiary” there shall be substituted the words “90 per cent. subsidiary”.
(3)In subsection (6) of that section, after the word “subscribed” there shall be inserted the word “for”.
(4)In subsection (7) of that section, the word “preferential”, in the second place where it occurs, shall cease to have effect.
(5)After subsection (8) of that section there shall be inserted the following subsection—
“(9)In this section “90 per cent. subsidiary”, in relation to the qualifying company, means a subsidiary of a kind which the company might hold by virtue of section 308 if—
(a)the references in subsection (2) of that section to 75 per cent. were references to 90 per cent.; and
(b)subsection (4) of that section were omitted.”