»Ê¹ÚÌåÓýapp

TCGA92/S236T(1)

»Ê¹ÚÌåÓýapp matters below are relevant to the ‘controlling interest requirementâ€�, see CG67850, and the ‘significant interestâ€� condition, the latter of which has to be fulfilled where the ‘all-employee benefit requirementâ€� is not met but is to be treated as met, see CG67846.

In some cases the strict terms of these requirements may not be met for genuine commercial reasons, even though the purpose of the EOT is not thereby compromised. »Ê¹ÚÌåÓýappre are special rules in TCGA92/S236T which ensure that in these closely-defined cases the requirements are treated as met.

TCGA92/S236T(2)

»Ê¹ÚÌåÓýapp definition of ‘equity holderâ€� is provided by CTA10/S158.

In determining the proportion of profits or assets available for distribution to a company, CTA10/Ss165-182 apply.

»Ê¹ÚÌåÓýapp guidance at CTM81000+ deals with the two points above in more detail.

TCGA92/S236T(3)

In deciding whether the trustees are entitled to a specified proportion or more of the profits available for distribution to equity holders, the trustees are to be treated as entitled to dividends even if they are permitted or required, by the trusts of the settlement, to waive their entitlement to those dividends.

TCGA92/S236T(4)

»Ê¹ÚÌåÓýapp ‘controlling interest requirementâ€� and the ‘significant interestâ€� condition both depend on there being no agreements under which the three principal conditions could cease to be satisfied, see CG67846 and CG67850. Certain types of provision may be ignored when deciding whether such agreements or instruments prevent the relevant condition being satisfied. »Ê¹ÚÌåÓýappse provisions, described below, are to be ignored only where they confer on the third party any entitlement in the event of a default by the trustees in performing their obligations in relation to the debt or loan.

• »Ê¹ÚÌåÓýapp provisions of a mortgage or charge granted by the trustees to a third party to secure any debt. In Scotland this applies to the provisions of a charge or security.
• »Ê¹ÚÌåÓýapp provisions of an agreement in respect of a loan made to the trustees by a third party.

»Ê¹ÚÌåÓýappse rules ensure that the trustees can use their shares in the company as security for a loan in the course of their normal activities. In their absence the mere possibility of the trustees losing control of the shares in the event of default would prevent them from meeting the ‘controlling interest requirementâ€�, see CG67850, or being treated as meeting the ‘all-employee benefit requirementâ€�, see CG67846.

If the trustees actually lose control of the shares, for instance through one of these provisions being invoked by a creditor, the relevant requirements will cease to be met and relief will not be due.

See CG67876 for an explanation of certain terms used in this paragraph.