CG17953h - Taper relief: trading company and holding company of a trading group - periods before 17 April 2002 - meaning of "holding company of a trading group"

TCGA92/SchA1/Para22 (1) defines a holding company as 'a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares in one or more companies which are its 51% subsidiaries'. The fact that such companies may be investment companies for the purpose of corporation tax does not mean that they cannot also be classed as holding companies for taper relief purposes.

Here 'wholly or mainly' means more than half of whatever measure is reasonable in the circumstances of the case (see CG17953d).

A company that is the holding company of a group may let properties it holds to subsidiaries for use in the subsidiaries' trades. The fact that rent is paid by the tenant company is not in itself a transaction to bring into account when considering whether or not a company is a holding company, even if a market rent is charged. Other intra- group transactions, such as inter-company lending and the use of intellectual property, are equally within this approach. This approach would not extend to transactions with qualifying joint venture companies (other than 51% subsidiaries).