Mr Harris, an architect, owned more than 75% of the taxpayer company. He also owned all the shares in John M Harris (Properties) Ltd. He wanted to buy a holiday home in France and was advised that the property should, for French legal reasons and especially because of the laws of inheritance, be owned by a limited company, and he decided that it should be held by Properties Ltd. It was used exclusively by Mr Harris and his family, and was never let.
Held: Properties Ltd should be disregarded for the purposes of calculating relief pursuant to section 13(4) since it had not carried on any trade or business at the relevant time. Although the main object of Properties Ltd in its Memorandum of Association was that of an investment company, it did not follow that it had carried on that business when it acquired any property. Although a company might be carrying on a business of investment even though its investments were such as to provide no income, that did not mean that a company had to be carrying on a business merely because it owned property.
Judges:
D A Shirley
Citations:
[1997] STC (SCD) 240
Jurisdiction:
England and Wales
Citing:
Applied – American Leaf Blending Co SDN BHD v Director-General of Inland Revenue PC 1979
(Malaysia) The taxpayer company had a cigarette making factory and a bonded warehouse for storing tobacco and cigarettes. Its business proved to be unprofitable, and it came to abandon both its manufacturing and trading businesses. It still owned . .
Cited by:
Cited – HM Revenue and Customs v Salaried Persons Postal Loans Ltd ChD 7-Apr-2006
The company had ceased trading, but rental income was still generated from its former premises. The Revenue sought to include the receipt in calculations of whether the company was entitled to a small company corporation tax rate. The Revenue . .
Lists of cited by and citing cases may be incomplete.
Corporation Tax
Updated: 01 May 2022; Ref: scu.242603