Section 405 | Adjustment 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 75% 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 75% subsidiary of a company, subsection (5) is to be read as if references to that company were substituted for references to A.