Good intentions

The taxpayer company of which G was the sole director had operated as a photography business for many years until 1996 when it ceased. From that date the company lent or leased its business premises until the property was sold in 2007.

The director said it was his plan to look for new properties in which he could reinvest the sale proceeds after a short break. In the meantime the proceeds were left on deposit in an interest-bearing bank account. However G said he was unable to carry out his plan because of the economic downturn and the falling property market.

In his corporation tax return for the period ended 31 May 2008 the company was described as a close investment-holding company which existed for the purpose of making investments in land or estates and qualified for marginal rate relief under...