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Interesting ER "activities" taxpayer win case

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Taxpayer won despite the company being stuffed with investment bonds and interesting contrast with IHT BPR.

This will be potentially relevant re substantial shareholding exemption also.

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By Wilson Philips
06th Sep 2019 19:30

That might have been a useful case for one of our clients in similar circumstances had HMRC not accepted that they mis-read the legislation.

Company traded for many years while also holding and managing sizeable investments (but less than 20%). Trade fell away but continued on a smaller scale until liquidation a couple of years later. There were actual investment activities so we accepted that, in the round, the company was not a trading company, as defined, for the last 12 months. However, what HMRC initially tried to argue was that since trade had not actually ceased the 3-year look-back provision could not apply - they argued that the trade would have to have ceased within the previous 3 years. When it was politely pointed out that there is no requirement for trade to cease, simply that the company ceased to be a trading company, as defined, they quickly backed down.

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