½Û×ÓÊÓƵ

A qualifying business activity is the carrying on of a qualifying trade (activity A) or research and development (activity B).

A qualifying trade must be carried on a commercial basis and with a view to the realisation of profits¹. If there is an intention to make a profit, it is immaterial if there is actually a loss.

The trade of a subsidiary acquired after the issue of shares by a company (P) (which becomes the parent on the acquisition of the subsidiary) cannot be treated as a qualifying trade for these purposes should P cease its own trade within period B (see E3.104)².

A trade is a qualifying trade provided that at any time in period B it does not consist wholly or as to 'a substantial part' of one or more of the activities ('excluded activities') listed below³. What is a substantial part of the trade depends on the particular circumstances, but HMRC normally accept activities as not substantial if the turnover or capital employed does not exceed