Chapter 3: Subsidiaries
Overview
3290.This Chapter sets out the circumstances in which one body corporate is regarded for the purposes of the Corporation Tax Acts as a “51% subsidiary”, “75% subsidiary” or “90% subsidiary” of another. It is based on section 838 of ICTA.
3291.The definitions apply in respect of a “body corporate” rather than a “company” as the definition of the latter term in section 1121 includes other types of body to whom these definitions are not relevant. But all bodies corporate in relation to whom the definitions are relevant are companies.
Section 1154: Meaning of “51% subsidiary”, “75% subsidiary” and “90% subsidiary”
3292.This section defines “51% subsidiary”, “75% subsidiary” and “90% subsidiary” in terms of beneficial ownership of the subsidiary’s ordinary share capital. It is based on section 838(1), (2) and (3) of ICTA.
3293.In the case of the definitions of “51% subsidiary” and “75% subsidiary” (but not “90% subsidiary”), “indirect ownership”counts towards meeting the test. Indirect ownership means the attribution to one company (“A”) of all or part of the ordinary share capital in the subsidiary in question held by a company in which A has an interest. The remainder of the Chapter sets out how such indirect ownership is identified and quantified.
Section 1155: Indirect ownership of ordinary share capital
3294.This section explains indirect ownership. It is based on section 838(2), (4) and (5) of ICTA.
Section 1156: Calculation of amounts owned indirectly: main rules
3295.This section sets out how to find how much of the ordinary share capital of a company that may be a “51% subsidiary” or “75% subsidiary” of another company (“A”) is owned indirectly by A. It is based on section 838(6), (7), (8) and (9) of ICTA.
Section 1157: Adding fractions together
3296.This section supplements section 1156 for the case where A owns part of the ordinary share capital of the potential “51% subsidiary” or “75% subsidiary” directly as well as having an indirect holding, or where a number of indirect holdings arise because of chains of ownership that have one or more different members. It is based on section 838(6) and (10) of ICTA.
