Commentary on Sections Overview Overview Section 179: Meaning of “qualifying business activity”
591.This section says what “qualifying business activity” means. It is based on section 289(2), (3A) and (8) of ICTA.
592.For EIS relief to be available, the share issue must raise money for the purpose of a qualifying business activity. (See section 174.)
593.In subsection (1) a qualifying business activity is explained by reference to activity A and activity B. The requirement is that these activities are carried out by the company or a qualifying 90% subsidiary.
594.The phrase “or preparing to carry on and then carrying on” in subsection (2)(b) is intended to be clearer than the phrase “preparing to carry on, or carrying on,” in section 289(2)(a)(ii) of ICTA. Each is concerned with money being raised both for the preparations for a trade and the subsequent carrying on of that trade.
595.Subsections (4) and (5) extend the cases in which R&D activities can be treated as a qualifying business activity. See Change 41 in Annex 1.
596.Subsection (7) enables certain requirements to be met in relation to a company that is not a qualifying 90% subsidiary at the time the shares are issued. See Change 42 in Annex 1.