Section 175 | The use of the money raised requirement

(1)A requirement of this section is that all of the money raised by the issue of the relevant shares (other than any of them which are bonus shares) is, no later than the time mentioned in subsection (3), employed wholly for the purpose of the qualifying business activity for which it was raised.

(1ZA)Employing money raised by the issue of the relevant shares (whether on its own or together with other money) on the acquisition, directly or indirectly, of—

(a)an interest in another company such that a company becomes a 51% subsidiary of the issuing company,

(b)a further interest in a company which is a 51% subsidiary of the issuing company,

(c)a trade,

(d)intangible assets employed for the purposes of a trade, or

(e)goodwill employed for the purposes of a trade,

does not amount to employing that money for the purposes of a qualifying business activity.

(1ZB)The Treasury may by regulations provide that subsection (1ZA) does not apply in relation to acquisitions of intangible assets which are of a description specified, or which occur in circumstances specified, in the regulations.

(1ZC)For the purposes of subsections (1ZA) and (1ZB)—

“goodwill” has the same meaning as in Part 8 of CTA 2009 (see section 715(3));

“intangible assets” means any asset which falls to be treated as an intangible asset in accordance with generally accepted accountancy practice;

and section 173A(6) and (7) (meaning of “trade” etc) applies as it applies for the purposes of section 173A.

(1A)Also, otherwise employing money on the acquisition of shares or stock in a company does not of itself amount to employing the money for the purposes of a qualifying business activity.

(1B)Another requirement of this section is that, of the money raised by the issue of the relevant shares (other than any of them which are bonus shares), only such part of that money as could have been raised by an issue of shares falling within subsection (1C) is employed for the purposes of a qualifying business activity that is carried on by one or more specified Northern Ireland companies.

(1C)Shares fall within this subsection if the general requirements referred to in section 172 as they apply in relation to shares issued by a specified Northern Ireland company are met in respect of them.

(2)The requirement in subsection (1) does not fail to be met merely because an amount of money which is not significant is employed for another purpose.

(3)The time referred to in subsection (1) is—

(a)the end of the period of two years beginning with the issue of the shares, or

(b)in the case of money raised only for the purpose of an activity to which section 179(2) applies, the end of the period of two years beginning with—

(i)the issue of the shares, or

(ii)if later, the time when the company or a qualifying 90% subsidiary of the company begins to carry on the qualifying trade.

(4)In determining for the purposes of subsection (3)(b) when a qualifying trade is begun to be carried on by a qualifying 90% subsidiary of a company, any carrying on by it of the trade before it became such a subsidiary is ignored.