trading company or investment company
at first glance would company A be deemed an investment company or trading company by HMRC:
Company A holds 100% of company B and has own turnover of about £24k (which amounts mainly of sales to company B). Co. A has net losses incurred and holds about £1,300,000 in bank, which has been built up over time. Bank interest received, less than £2k currently although in past years has been £40k Company B is Trading company in IT services/equipment-turnover £200k, with net losses incurred. It has a Negative balance sheet, with no significant cash held. Little bank interest received. Many thanks
Investment company
The cash blance held is far in excess of what would be needed to service a turnover of that level. Also the interest income has only fallen below turnover due to the exceptionally low interest rates available at the moment. I think the combination of these would lead to HM Revenue arguing its an investment company for CT, CGT and IHT purposes.
Is there a commercial reason why it's sitting on so much cash? Are there board minutes showing that its being kept to launch a new venture, say, when the market is right?