TC09530 - [2025] UKFTT 00566 (TC)

Finally, for completeness, we would add that, whilst the activities of PSSL in this case speak for themselves and we have not reached our conclusion on this point by reference to anything other than the activities of PSSL alone, we do not agree with the Respondents that, in determining the nature of a company’s activities, those activities must always be considered in isolation and without taking any account whatsoever of the activities of the company’s affiliates.

The latter are part of the context in which the company in question has carried out its activities and, as such, appropriate regard should be given to them. That is not to say that a company’s activities which are demonstrably non–trading in nature can be characterised as trading simply because the company has trading affiliates but it does mean that, where the purpose of a company’s activities is unclear or equivocal, the nature of the activities carried on by company’s affiliates might shed some light on how the company’s activities should be characterised.

For instance, in this case, had it been hard to determine from the activities of PSSL alone whether or not those activities were for the purposes of a trade that the company was preparing to carry on or with a view to the company’s starting to carry on a trade, then the fact that SW and CP had previously established a number of joint venture companies for the purposes of carrying out residential property re–development would seem to us to be a relevant factor to take into account in answering that question. That is not to say that the principle that each company is an independent entity for tax purposes can be disregarded. It is simply a recognition of the fact that the nature of a company’s activities needs to be determined in the light of all of the relevant facts and should not be addressed in a vacuum.