Corporation Tax Act 2010 (c. 4)

Part 9Leasing plant or machinery

Chapter 3Sales of lessors: leasing business carried on by a company alone

Introduction

382Introduction to Chapter

(1)This Chapter applies if there is a qualifying change of ownership in relation to a company carrying on a business of leasing plant or machinery otherwise than in partnership with other persons.

(2)For the meaning of “business of leasing plant or machinery”, see sections 387 to 391.

(3)For the meaning of “qualifying change of ownership”, see sections 392 to 398.

(4)As to cases where there is a qualifying change of ownership in relation to a company carrying on a business of leasing plant or machinery in partnership with other persons, see Chapter 4.

Income and matching expense in different accounting periods

383Income and matching expense in different accounting periods

(1)This section applies if on any day (“the relevant day”)—

(a)a company carries on a business of leasing plant or machinery otherwise than in partnership,

(b)the company is within the charge to corporation tax in respect of the business, and

(c)there is a qualifying change of ownership in relation to the company.

(2)On the relevant day—

(a)the company is treated as receiving an amount of income, and

(b)the accounting period of the company ends.

(3)The income—

(a)is treated as a receipt of the business, and

(b)is brought into account in calculating for corporation tax purposes the profits of the business for that accounting period.

(4)On the day following the relevant day—

(a)the company is treated as incurring an expense, and

(b)a new accounting period of the company begins.

(5)The expense—

(a)is treated as an expense of the business, and

(b)is allowed as a deduction in calculating for corporation tax purposes the profits of the business for that new accounting period.

(6)This section is supplemented by sections 384 to 386.

384Amount of income and expense

(1)The amount of the income under section 383 is calculated in accordance with sections 399 to 407.

(2)The amount of the expense under section 383 is the same as the amount of the income.

385No carry back of the expense

(1)This section applies if the business carried on by the company is a trade carried on wholly or partly in the United Kingdom the profits of which are chargeable to corporation tax under Chapter 2 of Part 3 of CTA 2009 (trading income).

(2)No relief is to be given as a result of section 37(3)(b) (relief for trade losses against total profits of earlier accounting periods) in respect of so much of any loss as derives from the expense.

(3)For the purpose of determining how much of a loss derives from the expense, the loss is to be calculated on the basis that the expense is the final amount to be deducted.

386Relief for expense otherwise giving rise to carried forward loss

(1)This section applies if—

(a)there is a qualifying change of ownership in relation to a company on any day (“the relevant day”),

(b)on the following day the company is treated under section 383 as incurring an expense of a business and an accounting period of the company (“period 1”) begins,

(c)the company makes a loss in period 1 or a later accounting period,

(d)apart from this section some or all of that loss (“the carried forward loss”) would be carried forward to the next accounting period of the company after the accounting period in which the loss is made (“the subsequent period”),

(e)some or all of the carried forward loss (“the derived loss”) derives from—

(i)the expense under section 383, or

(ii)an expense treated as arising under subsection (2) and allowed as a deduction for the accounting period in which the loss is made, and

(f)the subsequent period starts within the period of 5 years beginning immediately after the relevant day and does not start as a result of section 383 or 425.

(2)Instead of being so carried forward, the derived loss is to be treated for corporation tax purposes as giving rise to an expense of an amount equal to—

where—

DL is the derived loss,
D is the number of days in the accounting period in which the loss is made, and
R is the percentage rate applicable to section 826 of ICTA under section 178 of FA 1989.

(3)The amount of the expense under this section is allowed as a deduction in calculating for corporation tax purposes the profits of the business for the subsequent period.

(4)For the purpose of determining how much of the carried forward loss derives from the expense under section 383 or an expense within subsection (1)(e)(ii), the loss is to be calculated on the basis that that expense is the final amount to be deducted.

“Business of leasing plant or machinery”

387“Business of leasing plant or machinery”

(1)This section determines for the purposes of this Chapter whether, on any day (“the relevant day”), a company (“the relevant company”) carries on a business of leasing plant or machinery.

(2)A business carried on by the relevant company is a business of leasing plant or machinery on the relevant day if condition A or B is met.

(3)Condition A is that at least half of the relevant plant or machinery value relates to qualifying leased plant or machinery.

(4)Subsection (3) is supplemented by section 388.

(5)Condition B is that at least half of the relevant company’s income in the period of 12 months ending with the relevant day derives from qualifying leased plant or machinery.

(6)Subsection (5) is supplemented by section 391.

(7)For the purposes of this Chapter, plant or machinery is “qualifying leased plant or machinery”, in relation to a company, if—

(a)expenditure is incurred (or treated as incurred) by the company on the provision of the plant or machinery wholly or partly for the purposes of the business,

(b)the company would be (or would at any time have been) entitled, on the assumptions in subsection (8), to an allowance under Part 2 of CAA 2001 in respect of that expenditure, and

(c)at any time in the period of 12 months ending with the relevant day the plant or machinery has been subject to a plant or machinery lease which is not an excluded lease of background plant or machinery for a building (see section 437(3)).

(8)The assumptions are—

(a)that sections 34A and 70A of CAA 2001 (lessees, and not lessors, under long funding leases to be entitled to capital allowances) are ignored, and

(b)that any claim that could be made for an allowance under Part 2 of that Act is made.

388“Relevant plant or machinery value” for condition A in section 387

(1)This section applies for the purposes of condition A in section 387.

(2)The relevant plant or machinery value is the sum of the amounts in subsection (3), but subject to section 390 (relevant plant or machinery value where relevant company lessee under long funding lease etc).

(3)The amounts are—

(a)the amounts (if any) that would be shown in respect of plant or machinery in the appropriate balance sheet of the relevant company drawn up as at the start of the relevant day, and

(b)the amounts (if any) that would be shown in the appropriate balance sheet of the relevant company drawn up as at the end of the relevant day in respect of relevant transferred plant or machinery.

(4)For the purposes of subsection (3)(b) plant or machinery is “relevant transferred plant or machinery” if an amount in respect of it would be shown in the appropriate balance sheet of an associated company drawn up as at the start of the relevant day.

(5)This section is supplemented by section 389.

389Provision supplementing section 388

(1)For the purposes of section 388 and this section the amounts shown in the appropriate balance sheet of any company in respect of any plant or machinery are—

(a)the amounts shown in that balance sheet as the net book value (or carrying amount) in respect of the plant or machinery, and

(b)the amounts shown in that balance sheet as the net investment in respect of finance leases of the plant or machinery.

(2)If—

(a)any of the plant or machinery is a fixture in any land (see section 437(5)), and

(b)the amount which falls (or would fall) to be shown in an appropriate balance sheet as the net book value (or carrying amount) of the land includes (or would include) an amount in respect of the fixture,

the amount of the net book value (or carrying amount) in respect of the fixture is determined on a just and reasonable basis.

(3)If—

(a)any of the plant or machinery is subject to a finance lease (see section 437(4)), and

(b)any land or other asset which is not plant or machinery is subject to that lease,

the amount of the net investment in respect of the finance lease of that plant or machinery is determined on a just and reasonable basis.

(4)In section 388 and this section any reference to any amount shown in the appropriate balance sheet of a company is to the amount which, on the assumptions in subsection (5), falls (or would fall) to be shown in a balance sheet of the company.

(5)The assumptions are—

(a)that the balance sheet is drawn up in accordance with generally accepted accounting practice, and

(b)that, if the company acquired any plant or machinery in circumstances in which this paragraph applies, the plant or machinery had been acquired for an amount equal to its market value as at the relevant day.

(6)Paragraph (b) of subsection (5) applies if—

(a)the relevant day falls on or after 22 March 2006,

(b)the plant or machinery was acquired directly or indirectly from a person who was connected with the company when the acquisition took place, and

(c)either the acquisition took place on or after 5 December 2005 or the person from whom the plant or machinery was so acquired was also connected with the company on that date.

390Relevant plant or machinery value where relevant company lessee under long funding lease etc

(1)Any amount included in the amounts mentioned in section 388(2) in respect of plant or machinery to which this section applies is to be deducted from the sum mentioned in that section.

(2)But the market value as at the relevant day of any plant or machinery to which this section applies is to be added to that sum or, if that sum is nil, is the relevant plant or machinery value.

(3)This section applies to plant or machinery if—

(a)condition A or B is met at the start of the relevant day, or

(b)the plant or machinery is acquired by the relevant company from an associated company on the relevant day and condition A or B is met at the end of that day.

(4)Condition A is that the relevant company is the lessee of the plant or machinery under a long funding finance lease or a long funding operating lease.

(5)Condition B is that the relevant company is treated as the owner of the plant or machinery under section 67 of CAA 2001 (hire purchase and similar contracts).

391Relevant company’s income for condition B in section 387

(1)This section applies for the purposes of condition B in section 387.

(2)The reference to the relevant company’s income is to its income as calculated for corporation tax purposes.

(3)Any apportionment necessary to determine the amount of the relevant company’s income attributable to the period of 12 months ending with the relevant day is to be made on a time basis.

(4)But—

(a)that basis does not apply if it would work in an unjust or unreasonable way in relation to any person, and

(b)in that case the apportionment is to be made instead on a just and reasonable basis.

(5)The proportion of the income that derives from qualifying leased plant or machinery is to be determined on a just and reasonable basis.

“Qualifying change of ownership”

392“Qualifying change of ownership”

(1)This section defines when there is a qualifying change of ownership in relation to a company (“A”) for the purposes of the sales of lessors Chapters.

(2)There is a qualifying change of ownership in relation to A on any day if there is a relevant change in the relationship on that day between—

(a)A, and

(b)a principal company of A.

(3)For an exception to subsection (2) see section 395 (no qualifying change of ownership in certain intra-group reorganisations).

(4)There is a relevant change in the relationship between A and a principal company of A on any day in any of the circumstances in section 393 or 394 (qualifying 75% subsidiaries and consortium relationships).

(5)For an exception to subsection (4) see section 396 (no qualifying change of ownership where principal company’s interest in consortium company unchanged).

393Qualifying 75% subsidiaries

(1)A company (“B”) is a principal company of A if—

(a)A is a qualifying 75% subsidiary of B, and

(b)B is not a qualifying 75% subsidiary of another company.

(2)There is a relevant change in the relationship between A and B (as a principal company) on any day if A ceases to be a qualifying 75% subsidiary of B on that day.

(3)A company (“C”) is a principal company of A if—

(a)A is a qualifying 75% subsidiary of B,

(b)B is a qualifying 75% subsidiary of C, and

(c)C is not a qualifying 75% subsidiary of another company.

(4)There is a relevant change in the relationship between A and C (as a principal company) on any day if—

(a)A ceases to be a qualifying 75% subsidiary of B on that day, or

(b)B ceases to be a qualifying 75% subsidiary of C on that day.

(5)If C is a qualifying 75% subsidiary of another company (“D”), D is a principal company of A unless D is a qualifying 75% subsidiary of another company, and so on.

(6)Accordingly, there is a relevant change in the relationship between A and a principal company of A on any day if—

(a)in determining which company is a principal company, regard is had to any company which is a qualifying 75% subsidiary of another, and

(b)that company ceases to be a qualifying 75% subsidiary of the other on that day.

(7)This section is supplemented by section 398 (“qualifying 75% or 90% subsidiary” etc).

394Consortium relationships

(1)A company (“E”) is a principal company of A if—

(a)A is owned by a consortium of which E is a member, or

(b)A is a qualifying 90% subsidiary of a company owned by a consortium of which E is a member,

and E is not a qualifying 75% subsidiary of another company.

(2)There is a relevant change in the relationship between A and E (as a principal company) on any day if the ownership proportion at the end of the day is less than the ownership proportion at the start of the day.

(3)In this section “the ownership proportion” is whichever is the lowest of the following percentages—

(a)the percentage of the ordinary share capital of A that is beneficially owned by E,

(b)the percentage to which E is beneficially entitled of any profits available for distribution to equity holders of A, and

(c)the percentage to which E would be beneficially entitled of any assets of A available for distribution to its equity holders on a winding up.

(4)But if A is a qualifying 90% subsidiary of a company, subsection (3) is to be read as if references to that company were substituted for references to A.

(5)A company (“F”) is a principal company of A if, in a case where E is a qualifying 75% subsidiary of F but F is not a qualifying 75% subsidiary of another company—

(a)A is owned by a consortium of which E is a member, or

(b)A is a qualifying 90% subsidiary of a company owned by a consortium of which E is a member.

(6)There is a relevant change in the relationship between A and F (as a principal company) on any day if—

(a)the ownership proportion at the end of the day is less than the ownership proportion at the start of the day, or

(b)E ceases to be a qualifying 75% subsidiary of F on that day.

(7)If F is a qualifying 75% subsidiary of another company (“G”), G is a principal company of A unless G is a qualifying 75% subsidiary of another company, and so on.

(8)Accordingly, there is a relevant change in the relationship between A and a principal company of A on any day if—

(a)in determining which company is a principal company, regard is had to any company which is a qualifying 75% subsidiary of another, and

(b)that company ceases to be a qualifying 75% subsidiary of the other on that day,

(as well as if the ownership proportion at the end of the day is less than the ownership proportion at the start of the day).

(9)This section is supplemented by—

(a)section 397 (companies owned by consortiums and members of consortiums), and

(b)section 398 (“qualifying 75% or 90% subsidiary” etc).

395No qualifying change of ownership in certain intra-group reorganisations

(1)This section applies if—

(a)a relevant change in the relationship between a company (“A”) and a principal company of A occurs on any day,

(b)that change occurs by reference to A or any other company ceasing to be a qualifying 75% subsidiary on that day, and

(c)A, and every company by reference to which that change occurs, are qualifying 75% subsidiaries of the principal company concerned at the start and end of that day.

(2)For the purposes of the sales of lessors Chapters, there is no qualifying change of ownership in relation to A on that day as a result of that change in the relationship.

396No qualifying change of ownership where principal company’s interest in consortium company unchanged

(1)This section applies if—

(a)a company (“A”) is owned by a consortium, and

(b)a relevant change in the relationship between A and a principal company of A occurs on any day,

but the principal company’s interest in A remains unchanged.

(2)For the purposes of the sales of lessors Chapters, there is no qualifying change of ownership in relation to A on that day as a result of that change in that relationship.

(3)For the purposes of this section the principal company’s interest in A remains unchanged if the percentage of the ordinary share capital of A that is beneficially owned directly or indirectly by the principal company is the same at the beginning and end of that day.

(4)Sections 1155 to 1157 apply for construing subsection (3).

397Companies owned by consortiums and members of consortiums

(1)This section defines what a company being owned by, or a member of, a consortium means for the purposes of the sales of lessors Chapters.

(2)A company is owned by a consortium if—

(a)it is not a qualifying 75% subsidiary of any company,

(b)at least 75% of its ordinary share capital is beneficially owned between them by other companies, and

(c)none of those other companies owns less than 5% of that capital.

(3)Those other companies are the members of the consortium.

398“Qualifying 75% or 90% subsidiary” etc

(1)For the purposes of the sales of lessors Chapters, a company (“the subsidiary company”) is a qualifying 75% subsidiary of another company (“the parent company”) if condition A or B is met and condition C is met.

(2)Condition A is that—

(a)the subsidiary company has ordinary share capital, and

(b)the subsidiary company is a 75% subsidiary of the parent company.

(3)Condition B is that—

(a)the subsidiary company does not have ordinary share capital, and

(b)the parent company has control of the subsidiary company.

(4)Condition C is that the parent company—

(a)is beneficially entitled to at least 75% of any profits available for distribution to equity holders of the subsidiary company, and

(b)would be beneficially entitled to at least 75% of any assets of the subsidiary company available for distribution to its equity holders on a winding up.

(5)In the sales of lessors Chapters, references to a qualifying 90% subsidiary are to be read in the same way as references to a qualifying 75% subsidiary, but as if the references in subsections (1), (2) and (4) to 75% were to 90%.

(6)A company (“S”) cannot be a qualifying 90% subsidiary of another company for the purposes of the sales of lessors Chapters if S is a qualifying 75% subsidiary of a third company.

(7)Chapter 6 of Part 5 (equity holders and profits or assets available for distribution)—

(a)applies for the purposes of section 394(3)(b) and (c) (including that section as applied for the purposes of section 406(5)) and of section 405(5)(b) and (c) as that Chapter applies for the purposes of section 143(3)(b) and (c) (condition 1: surrendering company owned by consortium) and section 144(3)(b) and (c) (condition 1: claimant company owned by consortium), and

(b)applies for the purposes of subsection (4)(a) and (b) as that Chapter applies for the purposes of section 151(4)(a) and (b) (meaning of “75% subsidiary” and “90% subsidiary”).

(8)But in a case where the subsidiary company does not have ordinary share capital, Chapter 6 of Part 5 applies for those purposes as if the members of that company were equity holders of that company for the purposes of that Chapter.

The amount of the income

399The amount of the income: the basic amount

(1)This section determines the amount of the income under section 383 when a qualifying change of ownership in relation to a company carrying on a business of leasing plant or machinery occurs on any day.

(2)The amount of the income is found by—

(a)applying the formula in subsection (3) to give the basic amount, and

(b)making any adjustment in accordance with any of sections 404 to 406 to the basic amount.

(3)The formula is—

PM − TWDV

(4)For this purpose—

“PM” has the meaning given by sections 400 to 402, and
“TWDV” has the meaning given by section 403.

(5)In those sections references to the relevant company and the relevant day are to the company and the day mentioned in subsection (1).

400“PM” in section 399

(1)For the purposes of this section and sections 401 and 402 references to plant or machinery, in the case of any company, include all plant or machinery, whether or not subject to a lease, except for plant or machinery within subsection (2).

(2)Plant or machinery is within this subsection if—

(a)the company has not incurred expenditure on its provision that is qualifying expenditure for the purposes of Part 2 of CAA 2001,

(b)the company is a lessor of it under a long funding lease,

(c)as a result of section 67 of that Act (hire-purchase and similar contracts) it is treated for the purposes of that Part as owned by a person other than the company, or

(d)it is to be ignored as a result of section 407(2) (migration).

(3)For the purposes of section 399, “PM” is the sum of—

(a)the amounts (if any) which would be shown in respect of plant or machinery in the appropriate balance sheet of the relevant company drawn up as at the start of the relevant day, and

(b)the amounts (if any) which would be shown in the appropriate balance sheet of the relevant company drawn up as at the end of the relevant day in respect of relevant transferred plant or machinery.

(4)For the purposes of subsection (3)(b), plant or machinery is “relevant transferred plant or machinery” if an amount in respect of it would be shown in the appropriate balance sheet of an associated company drawn up as at the start of the relevant day.

(5)This section is supplemented by section 401 and is subject to section 402 (“PM” where relevant company lessee under long funding lease etc).

401Provisions supplementing section 400

(1)For the purposes of section 400 and this section the amounts shown in the appropriate balance sheet of any company in respect of any plant or machinery are—

(a)the amounts shown in that balance sheet as the net book value (or carrying amount) in respect of the plant or machinery, and

(b)the amounts shown in that balance sheet as the net investment in respect of finance leases of the plant or machinery.

(2)If—

(a)any of the plant or machinery is a fixture in any land (see section 437(5)), and

the amount of the net book value (or carrying amount) in respect of the fixture is determined on a just and reasonable basis.

(3)If—

(a)any of the plant or machinery is subject to a finance lease (see section 437(4)), and

(b)any land or asset which is not plant or machinery is subject to that lease,

the amount of the net investment in respect of the finance lease of that plant or machinery is determined on a just and reasonable basis.

(4)In section 400 and this section any reference to any amount shown in the appropriate balance sheet of a company is to the amount which, on the assumptions in subsection (5), falls (or would fall) to be shown in a balance sheet of the company.

(5)The assumptions are—

(a)that the balance sheet is drawn up in accordance with generally accepted accounting practice, and

(6)Paragraph (b) of subsection (5) applies if—

(a)the relevant day falls on or after 22 March 2006,

(b)the plant or machinery was acquired directly or indirectly from a person who was connected with the company when the acquisition took place, and

(c)either the acquisition took place on or after 5 December 2005 or the person from whom the plant or machinery was so acquired was also connected with the company on that date.

402“PM” where relevant company lessee under long funding lease etc

(1)Any amount included in the amounts mentioned in paragraph (a) or (b) of section 400(3) in respect of plant or machinery to which this section applies is to be deducted from the sum mentioned in that section.

(2)But the market value as at the relevant day of any plant or machinery to which this section applies is to be added to that sum or, if that sum is nil, is “PM”.

(3)This section applies to plant or machinery if—

(a)condition A or B is met at the start of the relevant day, or

(b)the plant or machinery is acquired by the relevant company from an associated company on the relevant day and condition A or B is met at the end of that day.

(4)Condition A is that the relevant company is the lessee of the plant or machinery under a long funding finance lease or a long funding operating lease.

(5)Condition B is that the relevant company is treated as the owner of the plant or machinery under section 67 of CAA 2001 (hire purchase and similar contracts).

403“TWDV” in section 399

(1)For the purposes of section 399, “TWDV” means the sum of—

(a)the total amount of unrelieved qualifying expenditure in single asset pools for the new chargeable period that is carried forward in the pools from the previous chargeable period under section 59 of CAA 2001,

(b)the total amount of unrelieved qualifying expenditure in class pools for the new chargeable period that is carried forward in the pools from the previous chargeable period under that section, and

(c)the amount of unrelieved qualifying expenditure in the main pool for the new chargeable period that is carried forward in the pool from the previous chargeable period under that section.

(2)For the purposes of this section—

(a)“the new chargeable period” means the accounting period of the relevant company that begins on the day following the relevant day (see section 383(4)(b)), and

(b)expenditure incurred by the relevant company in acquiring plant or machinery on the relevant day is to be left out of account unless it is acquired from an associated company.

404Amount to be nil if basic amount negative

If the basic amount given by the formula in section 399(3) is a negative amount, the amount is taken instead to be nil.

405Adjustment to the basic amount: qualifying 75% subsidiaries

(1)This section applies if—

(a)the qualifying change of ownership occurs on any day as a result of section 393 (qualifying 75% subsidiaries),

(b)the change occurs by reference to a company (“A”) ceasing to be a qualifying 75% subsidiary of another company (“B”) on that day, and

(c)on that day A meets one of the conditions in subsection (2).

(2)The conditions are—

(a)that A becomes owned by a consortium of which B is a member, or

(b)that A becomes a qualifying 90% subsidiary of a company owned by a consortium of which B is a member.

(3)The basic amount is adjusted so that the amount of the income is limited to the appropriate percentage of the basic amount.

(4)The appropriate percentage is found by subtracting the ownership percentage at the end of the day from 100%.

(5)For this purpose “the ownership percentage” is whichever is the lowest of the following percentages—

(a)the percentage of the ordinary share capital of A that is beneficially owned by B,

(b)the percentage to which B is beneficially entitled of any profits available for distribution to equity holders of A, and

(c)the percentage to which B would be beneficially entitled of any assets of A available for distribution to its equity holders on a winding up.

(6)But if A becomes a qualifying 90% subsidiary of a company, subsection (5) is to be read as if references to that company were substituted for references to A.

406Adjustment to the basic amount: consortium relationships

(1)This section applies if the qualifying change of ownership occurs as a result of section 394 (consortium relationships).

(2)In a case where that change arises only because the ownership proportion at the end of the day on which the change occurs is less than the ownership proportion at the start of the day, the amount of the income is limited to the appropriate proportion of the basic amount.

(3)The appropriate proportion is found by subtracting the ownership proportion at the end of the day from the ownership proportion at the start of the day.

(4)In any other case, the amount of the income is limited to the ownership proportion at the start of the day on which the change occurs of the basic amount.

(5)In this section “the ownership proportion” has the same meaning as in section 394 (see section 394(3) and (4)).

407Migration

(1)This section applies if on any day (“the relevant day”)—

(a)a company begins to be within the charge to corporation tax in respect of a business of leasing plant or machinery which it carries on otherwise than in partnership, and

(b)a qualifying change of ownership in relation to the company occurs.

(2)For the purposes of this Chapter, any plant or machinery is to be ignored in calculating the amount of the income treated as received on the relevant day if an amount would be shown in respect of it in a balance sheet of the company drawn up immediately before that day in accordance with generally accepted accounting practice.

“Associated company”

408“Associated company”

(1)This section gives the meaning of “associated company” for the purposes of this Chapter.

(2)References to an associated company in any provision other than subsection (6)(b) are to a company which is an associated company of the company that is the relevant company for the purposes of that provision on the day that is the relevant day for those purposes.

(3)A company is an “associated company” of another company on any day if, at the start of that day—

(a)one of the two has control of the other, or

(b)both are under the control of the same person or persons,

(4)Section 450 (meaning of “control” for the purposes of Part 10 (close companies)) applies for the purposes of subsection (3).

(5)Subsection (6) applies if at the start of any day a company (“the consortium company”)—

(a)is owned by a consortium, or

(b)is a qualifying 90% subsidiary of a company owned by a consortium.

(6)On that day the following companies are also associated companies of the consortium company—

(a)any relevant member of the consortium on that day, and

(b)any company which is an associated company of any relevant member of the consortium on that day.

(7)For the purposes of subsection (6) a member of the consortium is a “relevant” member on any day if—

(a)it is a member of the consortium at the start of the day,

(b)one or more qualifying changes of ownership occur in relation to the consortium company on that day, and

(c)any of those changes occur in a case where the member of the consortium is regarded as “E” for the purposes of section 394 (consortium relationships).