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HMRC internal manual

Company Taxation Manual

Close companies: close investment holding companies: purpose

In each case, it is a question of determining the relevant company’s purpose of existence, which is not necessarily the same as its current activities. Thus a company may exists for the purpose of carrying on a trade, even though in a particular accounting period it does not receive any trading income, or, indeed, actually carry on a trade. This would be exceptional. It will be a matter of fact whether or not it exists for a particular purpose, and what a company actually does will be a significant indicator of its purpose, but it must exist for that purpose throughout the relevant accounting period.