Share this content
0
305

Eligibility for entreprenneurs relief?

Is ER available when the trading company has a period of non trading?

Didn't find your answer?

Search AccountingWEB

Situation is sole director and 100% shareholder trading through a limited company.  Eligibility period for ER has been met (just), i.e. start of first contract to end of last contract, but it's not continual trading - there's a six month non trading period in the middle where the director/shareholder didn't trade through the company and was a permie employee instead.  
Is it the entire company operational period used for the qualifying ER period, or does a non trading period re-start the clock.  At the end of the day, he's not been trading for long enough if you count only the weeks/months he traded.

Replies

Please login or register to join the discussion.

08th May 2019 20:54

It’s a simple question of looking at the facts. Did the break consist of a temporary halt in trading activities, or did it amount to cessation of one trade and commencement of another?

Thanks (0)
avatar
09th May 2019 09:32

Condition A (in s169I(6)) is, in part, that, throughout the period of two years ending with the date of the disposal, the company is a trading company. "Trading company" is defined in s169SA. At some point, as you work through the definition, you will find yourself reading s165A(3): "Trading company" means a company carrying on trading activities…

Putting "throughout" and "carrying on" together, I can see your concern.

Thanks (0)
to Tax Dragon
09th May 2019 09:39

It's an interesting one. At first I thought that subsection 4 might help (preparing to carry on a trade etc, which contemplates that the company doesn't need to be carrying on trading activities as such at the time). However, the wording does imply that the company must be carrying on some activity.

Then again, if a company does nothing at weekends can it be said to be carrying on trading activities "throughout" the relevant period?

On balance, I agree that there is a risk here - if the amounts are significant, a non-statutory clearance might be in order.

Thanks (0)
avatar
to Wilson Philips
09th May 2019 09:59

There is probably no one-size-fits-all answer. That said, what we appear to have here is a contractor and, for such, I think the hiatus is likely fatal to the ER claim. (Contracts still exist at weekends, so that comparison is flawed.)

Thanks (0)
avatar
to Tax Dragon
09th May 2019 11:01

Not currently having any contracts or "orders", but pursuing them still constitutes the carrying on of a trade. Maybe the individual can provide evidence that such activity was going on.

After all, if (s)he's a contractor type, they might pursue contracts on an either/or basis constantly. And I'm sure they will have been looking for the next project during the currency of the 6-month project in question.

It's all just a matter of duck alignment.

However, I'm curious about the facts that will make ER a possibility for such an individual, unless they're retiring?

Thanks (0)
avatar
to Vile Nortin Naipaan
09th May 2019 11:06

I agree (in all regards).

I was taking at face value the information given by the OP. And, if retirement is upcoming/has happened, a few of those ducks may have swum away - making the information given very credible.

Thanks (0)
Share this content