Entrepreneurs’ relief for Corporate Parnter who ceased trading before 18 March 2015

Entrepreneurs’ relief for Corporate Parnter who...

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A corporate partner of an LLP ceased trading in April 2014 before the new rules were introduced on 18 March 2015. Are they still entitled to Entrepreneur's relief if the company makes a capital distribution now? This is within the 3 year rule but I am struggling to interpret the rules as to whether the company would have been classed as trading.

Clearly, if the company ceased trading on or after 18 March 2015 they would not be entitled to relief but the trade finished before this date.

Any guidance would be much appreciated! 

Replies (5)

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By andrew55
10th Mar 2016 13:24

Trading?

Was the company trading or just a partner in the LLP?

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By Portia Nina Levin
10th Mar 2016 13:39

That is the point Andrew. Prior to the changes a corporate partner in a trading LLP was regarded as trading (by virtue of TCGA 1992, sections 59 and 59A) , but not after the change.

@OP My reading of the change is that a corporate member of a trading LLP was a trading company up to 18 March 2015 (or earlier cessation), so in my view you have a valid ER claim.

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Replying to Paul Crowley:
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By andrew55
10th Mar 2016 14:49

Thanks Portia

Portia Nina Levin wrote:

That is the point Andrew. Prior to the changes a corporate partner in a trading LLP was regarded as trading (by virtue of TCGA 1992, sections 59 and 59A) , but not after the change.

@OP My reading of the change is that a corporate member of a trading LLP was a trading company up to 18 March 2015 (or earlier cessation), so in my view you have a valid ER claim.

That's interesting. We had a similar case last year and were advised the complete opposite by a well known tax helpline - hence my question. In our case the company had traded in its own right within three years so it wasn't an issue anyway.

Next time I'll just phone you :)

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Replying to DJKL:
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By shauncampbell
10th Mar 2016 16:27

Helpline

I originally asked our tax helpline and got the impression they were not 100% sure although the advice they gave me was eventually that a claim to Entrepreneur's Relief could not be made. I was dubious so that's why I asked the question on here.

 

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By cathygrimmer
10th Mar 2016 16:34

Agree with Portia

I agree with Portia - a cessation before the change on 18 March 2015 should still qualify for ER on a share disposal within 3 years.

Cathy

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