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Trading companies?

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09 June 2015

Issue: 4505 / Categories: Forum & Feedback

Explanation required of the changes to the entrepreneurs’ relief rules.

My client owns 50% of a company (TopCo) that holds 50% of a joint venture (JV) development company. There are no trading activities carried on by TopCo.

Before 18 March 2015 and assuming that the 75% condition was met TopCo was deemed to be carrying on trading activities (see TCGA 1992 s 165A(7)). Since 18 March s 165A(7) has been removed from the legislation so holding the shares in the JV is no longer deemed to be a trading activity. However there might be an argument that the holding is part of the trading activities of the company.

If my client held the shares directly in the JV he would hold 25% (50% x 50%) and there would be no problem with entrepreneurs’ relief. But for commercial reasons he owns the 25% indirectly through his company. Why should he now be denied this relief when...

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Trading companies?

© Copyright LexisNexis 2024. All rights reserved.

09 June 2015

Explanation required of the changes to the entrepreneurs’ relief rules.

My client owns 50% of a company (TopCo) that holds 50% of a joint venture (JV) development company. There are no trading activities carried on by TopCo.

Before 18 March 2015 and assuming that the 75% condition was met TopCo was deemed to be carrying on trading activities (see TCGA 1992 s 165A(7)). Since 18 March s 165A(7) has been removed from the legislation so holding the shares in the JV is no longer deemed to be a trading activity. However there might be an argument that the holding is part of the trading activities of the company.

If my client held the shares directly in the JV he would hold 25% (50% x 50%) and there would be no problem with entrepreneurs’ relief. But for commercial reasons he owns the 25% indirectly through his company. Why should he now be denied this relief when...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.

Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

Issue:

4505

Categories: Forum & Feedback [1]

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