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Trading or not?
Key points
- The First-tier Tribunal upholds a claim to capital gains tax entrepreneurs’ relief.
- The company was liquidated five years after it issued its final invoice.
- Was there some confusion by HMRC as to the company’s activities?
- The 2008 financial crash made trading conditions difficult for a business reliant on bank credit.
- Personal misfortunes also prevented some activity being undertaken.
- Did the purchase of investment bonds mean that there was substantial non-trading activity?
- The need to stand back and consider the company’s activities in the round.
The August 2019 decision of the First-tier Tribunal in J and N Potter (TC7348) is interesting for two reasons. First the tribunal found that the Potters’ family company should continue to be regarded as a trading company for some years after its final sales invoice was issued. This was the key conclusion reached in the case enabling Mr and Mrs Potter to succeed...
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