SCHEDULES
SCHEDULE 2Venture capital schemes
Enterprise investment scheme
1
1
Part 5 of ITA 2007 (enterprise investment scheme) is amended as follows.
2
In section 179 (meaning of “qualifying business activity”)—
a
in subsection (2)(b)(i), omit “wholly or mainly in the United Kingdom”,
b
omit subsection (3),
c
in subsection (4)(b)(i) and (ii), omit “wholly or mainly in the United Kingdom”, and
d
omit subsection (5).
3
In section 180 (overview of Chapter 4), before paragraph (a) insert—
za
UK permanent establishment (see section 180A),
zb
financial health (see section 180B),
4
Before section 181 insert—
180AThe UK permanent establishment requirement
1
The issuing company must meet the UK permanent establishment requirement throughout period B.
2
The UK permanent establishment requirement is that the issuing company has a permanent establishment in the United Kingdom.
180BThe financial health requirement
1
The issuing company must meet the financial health requirement at the beginning of period B.
2
The financial health requirement is that the issuing company is not in difficulty.
3
The issuing company is “in difficulty” if it is reasonable to assume that it would be regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02).
5
After section 191 (and before the italic heading “Excluded activities”) insert—
191AMeaning of “permanent establishment”
1
This section applies for the purposes of this Part.
2
A company has a “permanent establishment” in the United Kingdom if (and only if)—
a
it has a fixed place of business there through which the business of the company is wholly or partly carried on, or
b
an agent acting on behalf of the company has and habitually exercises there authority to enter into contracts on behalf of the company.
3
For the purposes of this section “fixed place of business” includes (without prejudice to the generality of that expression)—
a
a place of management,
b
a branch,
c
an office,
d
a factory,
e
a workshop,
f
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and
g
a building site or construction or installation project.
4
If the condition in subsection (5) is met, a company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that—
a
a fixed place of business is maintained there for the purpose of carrying on activities for the company, or
b
an agent carries on activities there for and on behalf of the company.
5
The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character.
6
For this purpose “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—
a
the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company,
b
the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery,
c
the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and
d
purchasing goods or merchandise, or collecting information, for the company.
7
A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it carries on business there through an agent of independent status (including a broker or a general commission agent) acting in the ordinary course of the agent's business.
8
A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it controls a company that—
a
is resident there, or
b
carries on business there (whether through a permanent establishment or otherwise).
9
The Treasury may by regulations amend this section.