Having reviewed previous posts I can't find the specifics relating to potential problems in this area. I have a good knowledge of process & timing it is the issue of whether the cash could be considered non-trading asset that concerns me. Pointers to relevant HMRC manual or other resource appreciated!
Steven Holloway
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Definitely invested the cash
Mmm ... definitely invested the cash in a variety of high interest deposits! I'm still interested in the source for this particular aspect of the ESC.
Thanks
My experience is...
Can't give you any sources or references beyond those in HMRC manual, but, from experience of a few of these, you should be OK if you apply for the ESC quickly enough once the trade has finished AND that the cash reserve was built up from trading profits AND that the reserves were never invested. I've had quite a few cases where the company had surplus money left in its current account and accumulated over a time period. Not once have I had an Inspector refuse the ESC or challenge the BATR claim. What I do is get the company tax inspector to confirm the company is a trading company by setting out the facts, primarily that the company has not actively "invested" - as I said, this has proved fine, but I have not tested it for a company that put the surplus funds in a high interest deposit account for example - that may tip it away from being a business. My approach would be to get company cleared as a trading company first then go for ESC. But watch out for the S703/7 - you may feel you need advance clearance that it is not for tax avoidance, after all the ESC can be refused or rescinded if there is a tax benefit!