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HMRC internal manual

Company Taxation Manual

Close companies: close investment holding companies: wholly or mainly

In order to be excluded from close investment-holding company status, the relevant company must exist throughout the accounting period wholly or mainly for the excluded purpose. Where, for example, a company has substantial income from sources other than (or as well as) trading or property investment, its purpose may not be clear-cut. There will also be cases where the amount and source of income is inconclusive as a test of purpose. In such cases, a common sense approach is needed, and a review of all the facts should enable you to make a decision, for example:

  • What are the relative levels, and sources, of income?
  • What activities has the company undertaken?
  • What do minutes of meetings and other documents reveal about the company’s business?
  • What are the assets (nature and amount) and to what uses have they been put?