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The taxpayer owned 14.65% of the equity in a limited liability partnership (LLP) established in June 2015 to build and operate a power plant. In 2016 the LLP applied to the Environment Agency for a permit to operate the plant which was issued in May 2017. By December 2017 the plant could import electricity but no electricity was generated commercially until June 2019.
In February 2020 the taxpayer disposed of his interest in the LLP and claimed entrepreneurs’ relief (now business asset disposal relief). HMRC refused the claim on the basis that the LLP was not trading throughout the two years before the disposal because it had not been in a position to provide the goods (electricity) which it was its trade to provide.
The taxpayer appealed.
The main issue for the First-tier Tribunal was when if at all the LLP began to trade....
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