Corporation tax - transfer of commercial properties to property dealing subsidiary for sale - properties acquired by subsidiary as trading stock so entitled to group relief
New Angel Court Ltd v Adam (HM Inspector of Taxes): CA (Lord Phillips of Worth Matravers Master of the Rolls, Lords Justices May and Jonathan Parker): 16 March 2004
The taxpayer, a property dealing company, was a member of a group of companies.
The group decided to sell properties held as investments by group members.
To obtain group relief the properties were transferred at market price to the taxpayer, which sold all but one of them at a profit.
The taxpayer claimed a trading loss of 68 million on the acquisition of the properties within section 173(1) of the Taxation of Chargeable Gains Act 1992, which could be surrendered to other group members.
By a notice of determination of loss, the Revenue excluded that sum.
The taxpayers' appeals to the special commissioners and the judge were dismissed.
The taxpayer appealed.
Jonathan Peacock QC (instructed by Levy Watters) for the taxpayer; Philip Jones (instructed by the Solicitor of Inland Reveue) for the Revenue.
Held, allowing the appeal, that in determining whether a member of a group had acquired an asset from any other member of the group as trading stock within section 173(1) of the 1992 Act, the question to be considered was whether the asset had been acquired for a trading purpose, not whether the transaction was for tax purposes; that the taxpayer's acquisition of the properties was a trading transaction entered into for trading purposes; and that, accordingly, the properties had been acquired as trading stock within section 173(1).
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