Pre-trading activities are not a business

The taxpayer was one of three partners in a partnership that began pre-trading activities in May 2014. Its business was to develop construct and operate renewable power plants. When two projects had reached the building stage the partnership sold them in 2015. The taxpayer claimed entrepreneurs’ relief on his share of the proceeds (TCGA 1992 s 169H).

HMRC refused the claim saying the partnership had not been trading (s 169S).

The taxpayer appealed. He said a partnership’s business disposed of before the start of actual trading and while still in the setting-up phase came within the definition of ‘a business’ under s 169S(1).

The First-tier Tribunal said the definition in s 169S(1) did not include the words ‘which has commenced trading’. On the taxpayer’s assertion that HMRC’s interpretation implied those words so that the period of a business’s existence before it began trading was excluded from...