Taxes Consolidation Act 1997 section 506

Anti-avoidance: qualifying company (SURE)

Section 506 sets out anti-avoidance rules that can deny a company qualifying status for the purposes of start-up relief for entrepreneurs (SURE).

• A company is not a qualifying company if, during the relevant period, any transaction between it and the SURE investor's immediate former employer (or a company controlling or controlled by that employer) is otherwise than at arm's length.
• Relief is also denied where an individual has acquired a controlling interest in the company's trade after 5 April 1984, has or has had a controlling interest in another trade at any time during the compliance period, and the company's trade (or a substantial part of it) is similar to, or serves substantially the same markets as, that other trade.
• A person has a controlling interest in a trade carried on by a company if that person controls the company, or, in the case of a close company, the person or an associate is a director and can directly or indirectly control more than 30 per cent of its ordinary share capital, or if at least 50 per cent of the trade could be regarded as belonging to that person under section 400(2); in any other case, a person has a controlling interest if entitled to at least 50 per cent of the assets used for, or the income arising from, the trade.
• The rights and powers of an associate of a person are attributed to that person when determining whether a controlling interest exists, and references to a company's trade include the trade of any of its subsidiaries.