Finance (No. 2) Bill (HC Bill 155)
SCHEDULE 13 continued
Contents page 310-319 320-329 330-339 340-349 350-359 360-369 370-379 380-389 390-397 400-416 417-418 420-428 430-439 440-449 450-459 460-478 479-479 480-489 490-499 500-509 510-519 Last page
(a)
the percentage of the voting rights that P holds directly in
the joint venture company, and
(b) P’s indirect voting rights percentage (see paragraph 10).
10 P’s “indirect voting rights percentage” is found by—
(a)
15calculating the percentage of the voting rights in the joint
venture company that P holds indirectly through a
particular investing company (see paragraph 11), and
(b)
where there are two or more investing companies, adding
those percentages together.
11
20The percentage of the voting rights in a joint venture company that
P holds indirectly through a particular investing company
(“company IC”) at a particular time is given by—

where—
-
25T is the fraction of the voting rights in company IC that is held
by P at that time, and -
U is the fraction of the voting rights in the joint venture
company that is held by company IC at that time (whether
the voting rights are held directly, indirectly, or partly
30directly and partly indirectly) (see paragraph 12).
12
(1)
The fraction of the voting rights in the joint venture company that
is held indirectly by company IC is calculated—
(a)
by applying sections 1156 and 1157 of CTA 2010, as read
with section 1155 of that Act, as if references in those
35sections to owning the ordinary share capital of a company
were references to holding voting rights in a company, and
(b) on the assumptions specified in sub-paragraph (2).
(2) The assumptions are—
(a)
where company IC directly holds more than 50% of the
40voting rights in a company, company IC is taken to hold all
the voting rights in that company;
(b)
where a company other than company IC (“company B”)
directly holds more than 50% of the voting rights in
another company (“company C”) which is a member of a
45group of companies of which company IC is a member,
Finance (No. 2) BillPage 417
company B is taken to hold all the voting rights in
company C.
Part 3 Partnerships
5Activities of a company as a member of a partnership
13
(1)
In relation to a disposal of assets consisting of (or of interests in)
shares in or securities of a company (“company A”), activities
carried on by a company as a member of a partnership are to be
treated as not being trading activities of the company (see section
10165A(4) and (9)) if P fails either or both of the following—
(a)
the profits and assets test in relation to the partnership (see
paragraphs 15 to 20);
(b)
the voting rights test in relation to the partnership (see
paragraphs 21 to 23).
(2)
15In relation to such a disposal, activities carried on by a company as
a member of a partnership are also to be treated as not being
trading activities of the company if the company is not a member
of the partnership throughout the relevant period.
Meaning of “direct interest company” and “relevant corporate partner”
14 (1) 20This paragraph applies for the purposes of this Part.
(2) A company is a “direct interest company” in relation to P if—
(a) it is company A (see paragraph 13(1)), or
(b)
P directly owns some portion of the ordinary share capital
of the company.
(3)
25A company is a “relevant corporate partner” in relation to P and a
partnership if—
(a)
a direct interest company in relation to P (“company DIC”)
owns some portion of the ordinary share capital of the
company (whether it is owned directly, indirectly or partly
30directly and partly indirectly),
(b)
the company is a member of a group of companies of
which company DIC is a member, and
(c) the company is a member of the partnership.
(4)
In sub-paragraph (3) the reference to a company owning share
35capital indirectly is to be read in accordance with section 1155 of
CTA 2010.
Profits and assets test
15
P passes the profits and assets test in relation to a partnership if,
throughout the relevant period, the sum of the percentages given
40by paragraphs (a), (b) and (c) is at least 5%—
(a)
the percentage which is P’s direct interest in the assets of
the partnership,
Finance (No. 2) BillPage 418
(b)
the percentage which is P’s share of the partnership
through direct interest companies that are members of the
partnership (see paragraph 16), and
(c)
the percentage which is P’s share of the partnership
5through direct interest companies and relevant corporate
partners in the partnership (see paragraph 18).
16
P’s “share of the partnership through direct interest companies
that are members of the partnership” is found by—
(a)
calculating the percentage which is P’s indirect share of the
10partnership through each direct interest company that is a
member of the partnership (see paragraph 17), and
(b)
where there are two or more direct interest companies that
are members of the partnership, adding those percentages
together.
17
15The percentage which is P’s indirect share of the partnership
through a particular direct interest company that is a member of
the partnership (“company DICP”) at a particular time is given
by—

20where—
-
R is the fraction of company DICP’s ordinary share capital
that is owned by P at that time, and -
V is the lower of—
(a)the fraction of the profits of the partnership in which
25company DICP has an interest at that time, and(b)the fraction of the assets of the partnership in which
company DICP has an interest at that time.
18
P’s “share of the partnership through direct interest companies
and relevant corporate partners in the partnership” is found by—
(a)
30calculating the percentage which is P’s indirect share of the
partnership through each direct interest company and
each relevant corporate partner in the partnership (see
paragraph 19), and
(b)
where there are two or more direct interest companies or
35two or more relevant corporate partners, or both, adding
those percentages together.
19
The percentage which is P’s indirect share of the partnership
through a particular direct interest company (“company DIC”)
and a particular relevant corporate partner in the partnership
40(“company CP”) at a particular time is given by—

where—
-
R is the fraction of company DIC’s ordinary share capital that
is owned by P at that time, -
45V is the lower of—
Finance (No. 2) BillPage 419
(a)the fraction of the profits of the partnership in which
company CP has an interest at that time, and(b)the fraction of the assets of the partnership in which
company CP has an interest at that time, and -
5W is the fraction of company CP’s ordinary share capital that
is owned by company DIC at that time (whether it is
owned directly, indirectly, or partly directly and partly
indirectly) (see paragraph 20).
20
(1)
The fraction of a company’s ordinary share capital that is owned
10indirectly by company DIC is calculated—
(a)
by applying sections 1156 and 1157 of CTA 2010, as read
with section 1155 of that Act, and
(b) on the assumptions specified in sub-paragraph (2).
(2) The assumptions are—
(a)
15where company DIC directly owns more than 50% of the
ordinary share capital of a company, company DIC is
taken to own the whole of the ordinary share capital of that
company;
(b)
where a company other than company DIC (“company B”)
20directly owns more than 50% of the ordinary share capital
of another company (“company C”) which is a member of
a group of companies of which company DIC is a member,
company B is taken to own the whole of the ordinary share
capital of company C.
25Voting rights test
21
(1)
P passes the voting rights test in relation to a partnership if,
throughout the relevant period, the sum of P’s direct voting rights
percentage and P’s indirect voting rights percentage is at least 5%.
(2) P’s “direct voting rights percentage” is found by—
(a)
30taking the percentage of the voting rights that P holds
directly in each direct interest company that is a member of
the partnership, and
(b)
where P directly holds voting rights in two or more direct
interest companies that are members of the partnership,
35adding those percentages together.
(3) P’s “indirect voting rights percentage” is found by—
(a)
calculating the percentage which is P’s indirect holding of
voting rights in each relevant corporate partner in the
partnership through each direct interest company (see
40paragraph 22), and
(b)
where there are two or more relevant corporate partners or
two or more direct interest companies, or both, adding
those percentages together.
22
The percentage which is P’s indirect holding of voting rights in a
45particular relevant corporate partner in the partnership