CG17921g - Taper relief: anti-avoidance rules - periods of inactivity - certain activities insufficient to make a company active
A company will not be regarded as active where all it does is one or more of the following:
- Holding money (in any currency) in cash or on deposit;
- Holding other assets whose total value is insignificant;
- Holding shares in or debentures of a company that is not active;
- Making loans to an associated company or to a participator or an associate of a participator; and
- Carrying out of certain statutory administrative functions.
For example, a company may issue 100 £1 ordinary shares
(fully paid). If that is all the company has done to date it will
not be active. Or, it may simply be a repository for funds which
are held in cash or on deposit without indulging in any other
activity.
Only where there is a structured commercial activity beyond
the holding of money on deposit which the company is carrying on,
or is preparing to carry on, would it count as active.
In another case a company may have invested the £100 it
received on the issue of the ordinary shares in an option to buy an
asset. The value of the option would normally be insignificant at
that time.
Finally, the company may simply carry out certain statutory
administrative functions such as making an annual return of
accounts to Companies House.
