TC09530 - [2025] UKFTT 00566 (TC)

As we have noted in paragraph 4 above, the only question at issue in each appeal is whether the disposal of shares in PSSL by the relevant Appellant was a “qualifying business disposal” for the purposes of Section 169H.

At the time when the disposals were made, Section 169H(2)(a) provided that the term “qualifying business disposals” included “a material disposal of business assets”.

The latter term was defined in Section 169I, the relevant parts of which were as follows:

“(1)

There is a material disposal of business assets where –

(a)

an individual makes a disposal of business assets (see subsection (2)), and

(b)

the disposal of business assets is a material disposal (see subsections (3) to (7)).

(2)

For the purposes of this Chapter a disposal of business assets is – …

(c)

a disposal of one or more assets consisting of (or of interests in) shares in or securities of a company …

(5)

A disposal within paragraph (c) of subsection (2) is a material disposal if condition A, B, C or D is met.

(6)

Condition A is that, throughout the period of 1 year ending with the date of the disposal –

(a)

the company is the individual's personal company and is … a trading company …, and

(b)

the individual is an officer or employee of the company …”.

It is common ground that each of the disposals in this case was a disposal of shares in a company so that it fell within Section 169I(2)(c) and that it was therefore a “disposal of business assets” for the purposes of Section 169I(1)(a). The dispute which has arisen is whether each such disposal was a “material disposal” for the purposes of Section 169I(5) by virtue of satisfying condition A in Section 169I(6).

In relation to condition A, it is common ground that, throughout the period of one year ending with the date of the disposal (the “relevant period”):

However, whereas the Appellants submit that PSSL was a trading company throughout the relevant period, the Respondents submit that it was not.

The definition of “trading company” for the purposes of Section 169I(6)(a) was set out in paragraph 1 of Schedule 7ZA. So far as is relevant to the disposals which are the subject of this decision, this incorporated the definition of “trading company” in Section 165A, the relevant provisions of which were as follows:

Trading company” means a company carrying on trading activities whose activities do not include to a substantial extent activities other than trading activities.

For the purposes of subsection (3) above “trading activities” means activities carried on by the company –

in the course of, or for the purposes of, a trade being carried on by it,

for the purposes of a trade that it is preparing to carry on, [or]