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Incorporation relief on a property business

Incorporation relief on a property business

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Hi all,

A little distraction from the last minute tax returns for you!

My view on incorporation relief is that it isnt available for property businesses.

I have re-read the manual CG65715 and looked into the case notes, specifically the 20 hours test. Is this one that you can justifying meeting with real conviction on a regular basis?

I am struggling with it.

Thanks

Matt

 

 

Replies (6)

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By Mr_awol
28th Jan 2022 18:17

Any property business? Is there a number of properties (or indeed hours invested) which would change your mind - even if it's a very high number?

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By David Ex
28th Jan 2022 20:34
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By AndyC555
29th Jan 2022 12:05

"specifically the 20 hours test."

That's what HMRC say. They say a lot of things that aren't in legislation or backed up by court cases.

probably the lead case is Elizabeth Moyne Ramsay v HMRC [2013] UKUT 266 TC.

In that case the upper tribunal refused to identify any specific threshold of activity by reference to a given number of hours or days spent on letting-related activities. Instead, the judgement was

"where the degree of activity outweighs what might normally be expected to
be carried out by a mere passive investor, even a diligent and conscientious one, that will in my judgment amount to a business"

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Replying to AndyC555:
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By Winnie Wiggleroom
29th Jan 2022 13:54

AndyC555 wrote:

"specifically the 20 hours test."

That's what HMRC say. They say a lot of things that aren't in legislation or backed up by court cases.

probably the lead case is Elizabeth Moyne Ramsay v HMRC [2013] UKUT 266 TC.

An excellent read and a good reminder to review each case on its own merit and on the available evidence of facts.

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Replying to AndyC555:
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By Tax Dragon
29th Jan 2022 15:09

An alternative, and perhaps more honest, representation of HMRC's comment is that they've said 20 hours will always be enough, whereas the court refused to do that. In other words, they have given a firm measure where none would otherwise be available. Below 20 hours and you are relying on a tribunal (or HMRC) accepting that there's a business based on other factors.

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By AnnAccountant
29th Jan 2022 17:49

"My view on incorporation relief is that it isnt available for property businesses.

I have re-read the manual........."

Maybe read it again? Plus read some other material. Then, perhaps, you'd struggle less. Or you could ask one of your many colleagues.

Or, sure, carry on arguing over a point that has been accepted by tax advisers, HMRC and the Tribunals for years. Maybe you are right and everyone else is wrong. Maybe.

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