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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Substantial shareholdings exemption: the trading company/group/subgroup requirements - when are non-trading activities substantial - the asset base of the company

TCGA92/SCH7AC/PARA20, TCGA92/SCH7AC/PARA21 & TCGA92/SCH7AC/PARA22

If the value of a company’s non-trading assets is substantial in comparison with its total assets then again, on this measure, this could point towards it not being a trading company.

If a company retains an asset it previously used, but no longer uses, for the purposes of its trade, this may not be a trading activity (but see CG53119 regarding surplus trading premises).

In some cases it might be appropriate to take account of intangible assets (e.g. goodwill) that are not shown on a balance sheet in considering a company’s assets. Current market value and amounts given by way of consideration for assets may both be appropriate measures of the relative extents of a company’s trading and other activities. Which measure is appropriate will depend on the facts in each case.