TC09530 - [2025] UKFTT 00566 (TC)

Fecha: 22-May-2025

Substantial non–trading activities

Substantial non–trading activities

Allam

43.

In support of their second proposition, the Respondents rely on the decision of the Upper Tribunal (the “UT”) in Dr Assem Allam v The Commissioners for Her Majesty’s Revenue and Customs [2021] UKUT 291 (TCC) (“Allam”) another case relating to the availability of entrepreneurs’ relief. In Allam, the issue in dispute was whether the activities of the company in question included, to a substantial extent, activities other than trading activities. Accordingly, the decision is of direct relevance in the context of the Respondents’ second proposition.

44.

We derive the following principles from the decision in Allam:

(1)

entrepreneurs’ relief should not be available for disposals of shares in companies that have non–trading activities which are of real importance when viewed in the context of the company’s activities as a whole;

(2)

although the legislation refers to “activities”, that word is not limited to the active steps which the company in question takes in the furtherance of its business. Even though investments may not require much active management, those investments must nevertheless be taken into account in the application of the test;

(3)

the test is a holistic one which is not confined to physical human activity but requires an overall consideration of what it is that the company actually does;

(4)

there is no authority in the legislation for using a numerical threshold in construing the phrase “to a substantial extent”. In each case, it is necessary to determine by reference to the facts as a whole whether the non–trading activities of the company are a substantial part of the activities of the company taken as a whole; and

(5)

the test is both quantitative and qualitative. It is necessary both to look at the nature of the activities and to measure in some way the extent of those activities.