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Review of definition of trading company scrapped.
The government is understood to have scrapped plans to review the definition of a ‘trading company’ for the purposes of capital gains tax entrepreneurs’ relief. The move had been announced by the chancellor in the 2016 Budget but the government no longer believes further policy changes are needed. The intention was to ensure that the provisions were operating effectively for gains arising on share disposals.
At the time it was understood that the initial review would be carried out in-house by HMRC officials before a short consultation on any proposed amendments.
Entrepreneurs’ relief expert Kevin Slevin said the change of heart followed the introduction of the targeted anti-abuse rule (TAAR) in ITTOIA 2005 s 396B and the strengthened transaction in securities anti-avoidance rules.
‘Officials feel that the opportunities for income to be converted to capital to gain a tax advantage for example by accumulating cash within...
