Finance Bill - continued        House of Commons
SCHEDULE 15, THE CORPORATE VENTURING SCHEME - continued
PART III, THE ISSUING COMPANY - continued

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Excluded activities: wholesale and retail distribution
     27. - (1) This paragraph supplements paragraph 26(1)(b).
 
      (2) A trade of wholesale distribution is one in which the goods are offered for sale and sold to persons for resale by them, or for processing and resale by them, to members of the general public for their use or consumption.
 
      (3) A trade of retail distribution is one in which the goods are offered for sale and sold to members of the general public for their use or consumption.
 
      (4) A trade is not an ordinary trade of wholesale or retail distribution if-
 
 
    (a) it consists, to a substantial extent, in dealing in goods of a kind which are collected or held as an investment, or in that activity and any other excluded activity taken together, and
 
    (b) a substantial proportion of those goods are held by the company for a period which is significantly longer than the period for which a vendor would reasonably be expected to hold them while endeavouring to dispose of them at their market value.
      (5) In determining whether a trade carried on by any person is an ordinary trade of wholesale or retail distribution, regard shall be had to the extent to which it has the following features-
 
 
    (a) the goods are bought by that person in quantities larger than those in which he sells them;
 
    (b) the goods are bought and sold by that person in different markets;
 
    (c) that person employs staff and incurs expenses in the trade in addition to the cost of the goods and, in the case of a trade carried on by a company, to any remuneration paid to any person connected with it;
 
    (d) there are purchases or sales from or to persons who are connected with that person;
 
    (e) purchases are matched with forward sales or vice versa;
 
    (f) the goods are held by that person for longer than is normal for goods of the kind in question;
 
    (g) the trade is carried on otherwise than at a place or places commonly used for wholesale or retail trade;
 
    (h) that person does not take physical possession of the goods.
      (6) The features specified in sub-paragraph (5)(a) to (c) are indications that the trade is such an ordinary trade.
 
  Those in sub-paragraph (5)(d) to (h) are indications of the contrary.
 
 
Excluded activities: leasing of ships
     28. - (1) This paragraph supplements paragraph 26(1)(d) so far as it relates to the leasing of ships other than oil rigs or pleasure craft.
 
      (2) A trade shall not be treated as not being a qualifying trade by reason only of its consisting in letting such ships on charter if the following requirements are met-
 
 
    (a) every ship let on charter by the company carrying on the trade is beneficially owned by the company;
 
    (b) every ship beneficially owned by the company is registered in the United Kingdom;
 
    (c) the company is solely responsible for arranging the marketing of the services of its ships; and
 
    (d) the conditions mentioned in sub-paragraph (3) are satisfied in relation to every letting of a ship on charter by the company.
      (3) The conditions are that-
 
 
    (a) the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer;
 
    (b) during the period of the letting there is no provision in force (whether by virtue of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made;
 
    (c) the letting is by way of a bargain made at arm's length between the company and a person who is not connected with it;
 
    (d) under the terms of the charter the company is responsible as principal-
 
      (i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and
 
      (ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period;
 
      and
 
    (e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company.
      (4) In relation to any letting between one company and another where-
 
 
    (a) one of those companies is the company carrying on the trade and the other is a qualifying subsidiary of that company, or
 
    (b) both companies are qualifying subsidiaries of the company carrying on the trade,
       sub-paragraph (3) has effect with the omission of paragraph (c).
 
      (5) Where any of the requirements in sub-paragraph (2) are not met in relation to any lettings, the trade shall not thereby be treated as not a qualifying trade if those lettings and any other excluded activities do not, taken together, amount to a substantial part of the trade.
 
      (6) In this paragraph-
 
 
    "oil rig" means any ship which is an offshore installation for the purposes of the Mineral Workings (Offshore Installations) Act 1971; and
 
    "pleasure craft" means any ship of a kind primarily used for sport or recreation.
 
Excluded activities: receipt of royalties and licence fees
     29. - (1) This paragraph supplements paragraph 26(1)(d) so far as it relates to the receipt of royalties and licence fees.
 
      (2) A trade shall not be regarded as not being a qualifying trade by reason only that at some time in the qualification period relating to the relevant shares it consists to a substantial extent in the receiving of royalties or licence fees if the royalties and licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
 
      (3) For this purpose an intangible asset is a "relevant intangible asset" if the whole or greater part (in terms of value) of it has been created-
 
 
    (a) by the company carrying on the trade, or
 
    (b) by a company which at all times during which it created the asset was-
 
      (i) the parent company of the company carrying on the trade, or
 
      (ii) a qualifying subsidiary of that parent company.
      (4) In this paragraph "intangible asset" means any asset which falls to be treated as an intangible asset in accordance with normal accounting practice.
 
  For this purpose "normal accounting practice" means normal accounting practice in relation to the accounts of companies incorporated in any part of the United Kingdom.
 
      (5) In the case of a relevant asset that is intellectual property, references in this paragraph to the creation of the asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
 
      (6) In sub-paragraph (5) "intellectual property" means-
 
 
    (a) any patent, trade mark, registered design, copyright, design right, performer's right or plant breeder's right; and
 
    (b) any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a).
 
Excluded activities: property development
     30. - (1) This paragraph supplements paragraph 26(1)(f).
 
      (2) "Property development" means the development of land-
 
 
    (a) by a company which has, or at any time has had, an interest in the land, and
 
    (b) with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed.
      (3) For this purpose "interest in land" means, subject to sub-paragraph (4)-
 
 
    (a) any estate, interest or right in or over land, including any right affecting the use or disposition of land, or
 
    (b) any right to obtain such an estate, interest or right from another which is conditional on the other's ability to grant it.
      (4) References in this paragraph to an interest in land do not include-
 
 
    (a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land, or
 
    (b) in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land.
 
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