Associated Companies and Property Investment Co

Are property companies classed as trading companies for the Associated Company rules

Didn't find your answer?

I'm just refreshing my knowledge on the associated company rules, I have a number of clients that run businesses through a limited company and they also may hold a BTL property in a limited company.  I can see from the legislation that we can ignore companies that have not carried on a business, just wondering if a property company holding residential buy to lets would be treated as carrying on a trade.

Replies (11)

Please login or register to join the discussion.

avatar
By nrw2
18th Apr 2023 13:25

Whether or not a company has carried on a business is not determined by whether it's a trading or investment company in this context - are you confusing these?

I doubt whether your property investment company meets the definitions of either 'wholly dormant companies' or 'non-trading holding companies that meet specific conditions set out in CTA10/S26, formerly SP5/94':

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm03590

Thanks (0)
avatar
By VCM Accountants
18th Apr 2023 13:37

Thanks nrw2, you're right I was confusing them. When reading CTA10/S26 It was clear the property company did not meet the definitions but I read a later article that confused me.

Thanks for your prompt reply :)

Thanks (1)
avatar
By richard thomas
18th Apr 2023 15:54

I assumed that this question was about the new rules for associated companies for the new small profits rate, so I was confused by the references to the CT Manual and to s 26 CTA 2010, neither of which applies after 2014.

The law about associated companies is in s 18E and 18F CTA 2010, inserted in that act as a new part 3A by FA 2021. It looks as if it says the same, but one can never be sure.

Thanks (2)
avatar
By AlexLake
07th Jun 2023 11:34

It's great to see you refreshing your knowledge on the associated company rules. From my understanding, when it comes to property companies, whether they’re considered trading companies for these rules depends on a few factors.

Thanks (0)
Replying to AlexLake:
Avatar
By I'msorryIhaven'taclue
07th Jun 2023 11:59

Uhhu.... Alexa, be quiet!

Thanks (2)
Replying to AlexLake:
avatar
By DKB-Sheffield
07th Jun 2023 12:04

AlexLake wrote:

From my understanding, when it comes to property companies, whether they’re considered trading companies for these rules depends on a few factors.

You don't say?!

Care to share those factors?

When it comes to tax, whether you have to pay also depends on a few factors.

It must be taxbot training month on AWeb!

Thanks (2)
Replying to DKB-Sheffield:
Avatar
By I'msorryIhaven'taclue
07th Jun 2023 12:36

Either that or Alex Lake is trying out for the Tax Editor vacancy!

Thanks (1)
Replying to I'msorryIhaven'taclue:
avatar
By DKB-Sheffield
07th Jun 2023 13:08

I'msorryIhaven'taclue wrote:

Either that or Alex Lake is trying out for the Tax Editor vacancy!

Maybe not. But certainly adequate for a senior HMRC role! Certainly a more informative answer than I've had from the helpline recently!

If the bot was 'trained' on current HMRC guidance, I can see how such a vague answer may come about!

Thanks (2)
Replying to DKB-Sheffield:
Avatar
By I'msorryIhaven'taclue
07th Jun 2023 13:18

DKB-Sheffield wrote:

Maybe not. But certainly adequate for a senior HMRC role!

The fact that it took two-and-a-half months to post a cr*ppy reply makes it a strong candidate ;)

Thanks (4)
Replying to I'msorryIhaven'taclue:
avatar
By Yossarian
08th Jun 2023 12:06

HMRC taxbots are a diverse team and abuse of any sort will be exterminated.

Thanks (1)
Replying to I'msorryIhaven'taclue:
avatar
By Hugo Fair
09th Jun 2023 12:47

"Either that or Alex Lake is trying out for the Tax Editor vacancy!"

Actually it now looks as though Alex was acting as a trojan horse for @joantucker (see below) ... who has posted the *identical* wording (other than adding further text as a lead-in to an advert link)!

EDIT: none of which will make much sense anymore, as the joantucker post has now been removed!

Thanks (1)