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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: company status - development corporations

HMRC does not consider that development corporations are investment companies within ICTA88/S130 for periods up to 31 March 2004. Their business did not consist wholly or mainly in the making of investments. The reason for the Revenue’s view is that development corporations are far removed from investment companies as ordinarily understood by the business community. For example, under the Local Government Planning and Land Act 1980, the prime statutory objective of an urban development corporation is ‘regenerating an urban area’. Its ‘investments’ may be in land, but the acquisition and holding of land is subordinate to its prime statutory objective.

Whether such a company could have a business that consists wholly or partly in the making of investments, such that it could be a company with investment business, will require detailed consideration of the facts and application of the appropriate case law (CTM08040).