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Is this a trading company for entreprenuers relief

Company which manages a portfolio of flat management companies is being sold. Trading company?

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A client operates a company which manages a portfolio of flat management companies. It's income is derived from charging a fee for managing all aspects of the flat management companies.

Client is now disposing of the company and I am checking whether entreprenuers relief is available on the sale of the shares. Everything seems to qualify (1 year ownership rules, 5% of voting rights etc) however I want to double check that a company managing a portfolio of flat management companies is regarded as a "trading company". From my research it is, as it owns no investments (apart from bank interest) and receives no rental income. It's purley a management charge which forms the company's turnover and apart from bank inetrest there are no other investments.

Am I correct to treat this type of company as a "trading company" for entreprenuers relief?

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By gbuckell
30th Nov 2018 09:52

On the face of it I would say it is trading for ER purposes. My only reservation is are these flat management companies owned by unconnected parties?

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By Marsh1
30th Nov 2018 11:43

Yes the flat management companies are owned by unconnected parties.

May I ask why this is significant? :)

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By gbuckell
30th Nov 2018 15:01

If they were connected it might be argued that the company was not carrying on a genuine trade although I accept the point is debatable. After all, if a stand alone company with property investment does not qualify then why should a separate company hived off to undertake the management function?

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Replying to gbuckell:
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By DJKL
30th Nov 2018 14:27

You have an extra "un", I think.

Of course once you get into vat registration territory any "edge" such an approach might have ,if residential property involved, might well be lost.

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Replying to DJKL:
By gbuckell
30th Nov 2018 15:01

Now corrected - thank you.

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