Trading company for business asset disposal relief

What follows raises the possibility of capital gains tax business asset disposal relief (BADR) being available in respect of gains realised on a share disposal where the company to which the shares relate is not carrying on a trade (nor need it be the holding company of a trading group). What’s more it may never have traded.

I am not focusing on a dubious loophole in the tax legislation. Rather I am seeking to draw attention to a specific provision designed to enable shareholders to enjoy the benefit of the 10% CGT rate. It is possibly the rather tortuous wording of the legislation that has resulted in tax practitioners seldom giving the relevant provisions a second glance. So I am hoping to throw some light on matters.

This is not an article about complex group structure. Its focus is on a simple shareholding in an unquoted company – the...