HM Revenue & Customs (HMRC) updated the Business Investment Relief (BIR) legislation which was introduced on April 6, 2012. With the amendments, a new category of qualifying target company is added to the target company list. These changes retroactively came into effect since April 6, 2017.
Under the revamp, hybrid companies fulfilling all the requirements below are entitled to be BIR legislation:
As regards “non-operational” requirement for such hybrid, it refers to the hybrid not trading, and it holds no investments in any eligible trading companies, or none of the eligible trading companies it holds investments in are trading.
A company which is a partner in a partnership will not be regarded as carrying on a trade if the trade is carried on by the partnership, because it fails to meet the commercial trade test conditions, which refers to conducting on a commercial basis with a view to making profits. Whether carrying on a commercial trade is all or substantially all of a trading company’s activities, will depend on a consideration of all of the relevant facts. In addition, the relevant trade accounts for at least 80% of the company’s total activities will generally be regarded as meeting the ‘all or substantially all’ requirement.
When a qualifying investment is made, situations might arise which are treated as a potentially chargeable event, and the investment becomes chargeable when:
Source: UK Government
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