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Eyre and others v HMRC

The disposal of shares in a trading company qualifies (assuming all the other conditions are met) for entrepreneurs’ relief (now business asset disposal relief). A trading company for these purposes includes one which is preparing to carry on a trade.

The question here was whether the company, which was developing a single property with a view to sale, met the qualifying conditions. The tribunal criticised some of the evidence given by the directors but ultimately accepted that the company did have the intention to trade even though it had not received planning permission for the development and the property remained unsold many years later.

This was perhaps a generous interpretation of what happened, and at that stage in the judgment the taxpayers must have been confident of success. But the tribunal then considered another point: was relief denied because the company had substantial non-trading activities?

Here the tribunal pointed to the fact that the company had received significant amounts of rental income in the period in question