Dilution of Entrepreneur's Relief
Client owns shares in a limited company - 100% shareholder, also director.
5 years ago company built a property and received rental income.
1.5 years ago this property was sold and made a substantial gain (tax has been paid).
Company then used the net proceeds to fund a building project (with no intention to rent) which has been sold to a third party. Company is now building a third proeprty which is to be sold to a third party.
Up to the point when the first property was sold the company was an investement company, and then became a trading company when the building activities started.
If my client formally liquidates the company after selling the third property (and paying all the CT due on the trading activities), will he be entitled to full ER on the gain at liquidation? Or will there be a time apportionment between the period of being an investment company and being a trading company?
My reading of the legislation suggest that he will be entitled to ER in full but someone has suggested that I should check time apportionment.