RPSM07109450 - Technical pages: Investments: Taxable property: Indirect Holdings: Trading concerns

Indirect holdings not subject to tax charges: Trading concerns

These are vehicles that are arm's length trading vehicles. There are four conditions to be met

• The vehicles main activity is the carrying on of a trade, profession or vocation.
• The pension scheme either alone or together with associated persons does not have control of the vehicle.
• Neither a pension scheme member nor a person connected to such a member is a controlling director of the vehicle or any other vehicle which holds an interest in the vehicle directly or indirectly.
• The pension scheme does not directly or indirectly hold an interest in the vehicle for the purposes of enabling a pension scheme member or a connected person of such a member to occupy or use the property.

"control" has the meaning given by section 416 Income and Corporation Taxes Act 1988. In doing so read references in that section to a company as references to the vehicle and associates as including associated persons. "Controlling director" means a director to whom paragraph (b) of section 417(5) Income and Corporation Taxes Act 1988 applies, broadly 20% controlling directors. In that section read the reference to associates as including associated persons.

This enables pension schemes to invest commercially in trading concerns without worrying about tangible moveable property that is being used by the company for its trade.

The term "associated person" in relation to the pension scheme means,

• Any member of the pension scheme,
• Any person connected with such a member,
• any arrangement (under that or another pension scheme) relating to a member of the pension scheme,
• any arrangement (under that or another pension scheme) relating to a person connected to such a member,
• any associated pension scheme, see definition in RPSM07109440.