CG17921b - Taper relief: anti-avoidance rules - periods of inactivity - requirement to be close

Whether or not a company is close at any time for the purposes of TCGA92/SchA1/Para11A is to be determined in accordance with the normal rules found in sections 414 and 415 of the Income and Corporation Taxes Act 1988, see CTM60100 onwards.

The assessment of whether a company is both close and inactive needs to be made for all times that shares were owned and may involve more than one company if there has been a share reorganisation, see CG17921c. That is different to TCGA92/SchA1/Para11, see CG17919, where the assessment whether a company was close needed only to be made in respect of the position on a disposal and only in relation to the company in which the shares were held at the time of the disposal.

A period when a company is inactive but not close will still count for taper relief purposes. So, in example 2 at CG17921, if the company had been a non-close company at all times then TCGA92/SchA1/Para11A would not apply and John's qualifying holding period and relevant period of ownership would be 1 May 1999 to 1 December 2005.