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HMRC internal manual

Capital Gains Manual

Reliefs: employee-ownership trusts: conditions: the 'trading requirement': trading company

TCGA92/S236I(2), (4) and (5)

Trading company means a company carrying on trading activities and whose activities must not include to a substantial extent activities other than trading activities.

Trading activities means activities carried on by the company in the course of, or for the purposes of, a trade being carried on by it.

For these purposes a business carried on by a company in partnership with one or more other persons is to be treated as not being a trading activity.  This is to ensure that control of the company by the trustees carries with it control of the company’s business; where a company carries on business in partnership with others, control of the business does not follow from control of the company.