CG17953r - Taper relief: trading company and holding company of a trading group - applications for a ruling on the status of a company
If a person wants to establish whether a company in which they
held shares was a qualifying company for taper relief purposes
while the shares were held, that person should, in the first
instance, seek advice from the company. The company will usually be
able to confirm if its activities were such that it was a trading
company (or the holding company of a trading group) so that it
could have been a qualifying company so far as that individual was
concerned.
The responsibility for ascertaining the business or
non-business status of shares held in a company referred to in a
self-assessment Income Tax return rests with the individual
shareholder making the disposal. They will need to take a view and
make their self- assessment return on this basis. Where appropriate
the white space on the return may be used to point out that an
unsuccessful approach has been made to the company for confirmation
of its status.
In some circumstances a significant number of shareholders
may need to know the status of a company after making disposals of
shares AND the where the company itself has genuine doubt or
difficulty as to its trading status. In such circumstances, the
company may seek a post-transaction ruling from its Officer of
Revenue and Customs for the assistance of the individual
shareholders. Any request should be in the format prescribed in
appendix 1 of Code of Practice 10. In order to maintain
confidentiality the Officer dealing with the company’s tax
affairs will not be able to correspond directly with individual
shareholders.
Any opinion that a company is or is not a trading company, or
a group is or is not a trading group, can relate only to the period
for which information is available. It is possible for a company or
group to change its status at any time, as its business or
activities change.
You should be able to give a firm opinion on the status of a
company for periods that have ended where all the relevant facts
have been provided. A view should not however be expressed in
relation to any periods for which facts are not yet available, and
it should be borne in mind that future events may put a different
perspective on the true nature of the activities of a company or
group during a previous period.
Because of the inherent difficulty in giving a view based on
uncertain information, in some cases those involved may prefer to
wait until all the relevant facts are known before approaching an
Inspector.
To allow you to form a view any application by a company for
a post-transaction opinion should be made in the format prescribed
in appendix 1 of Code of Practice 10 and should set out for you the
following in any request:
- the reason why it is seeking your opinion and the period over which the company wants you to consider its status;
- all the facts that the company considers relevant in measuring the extent of its trading and its non trading activities and, where appropriate, the assumptions it has made in describing what it expects its activities to comprise over the part of the period falling after the latest point for which data is available;
- why the company considers that there is doubt, difficulty or uncertainty as to its status;
- the company's conclusion as to its status, and why it considers, if applicable, that the measures that point in that direction outweigh those pointing in the opposite direction.
You should offer your opinion whenever this is practicable and, if this differs from the company's view, explain the reasons for that difference. Having expressed your opinion you should not then enter into any further correspondence on the matter, as the correct way to escalate the issue in the event of a dispute is by way of an enquiry into a return. Clearly an enquiry cannot be made before the return is submitted (see Regina v CIR ex parte Bishopp (on behalf of PWC) and Allan (on behalf of E&Y) (72 TC 322).
