Trading or non trading?

Company using the job retention scheme

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I can't quite make up my mind on this one, so any views would be helpful.

Personal service company, been trading for two years.  Contract terminated as a result of covid.  Uses the job retention scheme for 6 months as unable to pick up a new contract.

Now winding up the company as took a PAYE role.  If we look back for two years we see:

  • 1.5 years trading normally
  • 0.5 years using the job retention scheme

The question is - was the company 'trading' for the final 6 months and will the capital distribution from the MVL qualify for business asset disposal relief?

Thanks for any input.


Replies (4)

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By stepurhan
15th Oct 2020 10:51

If the intention was to take on a new contract, and the PAYE position was only taken on when it became clear nothing was available, I would say the trade had continued.

The flip side of that is would continuing to look for a new contract count as work that invalidated the furlough claim. That is a tricky question as the allowed "director's duties" was very vaguely defined.

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Replying to stepurhan:
By JCresswellTax
15th Oct 2020 11:03

Thanks Stepurhan.

Yes, my concern with using the normal argument of 'looking for new contracts' may invalidate the CJRS claim!

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By MuayThai
15th Oct 2020 11:09

If the company was trading for 2 years then ceases trading, there's a 3 year time limit in which ER will still apply on wind up

TCGA 1992 s.169I (7)

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Replying to MuayThai:
By JCresswellTax
15th Oct 2020 11:13

Amazing. Thank you :)

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