Taxation of Chargeable Gains Act 1992 Schedule 7AC paragraph 20

Meaning of "trading company"

Section 20 defines the term "trading company" for the purposes of the substantial shareholdings exemption regime, setting out what constitutes trading activities and when preparatory or acquisition activities qualify.

• A trading company is one that carries on trading activities and whose activities do not include, to a substantial extent, non-trading activities.
• Trading activities include those carried on in the course of a current trade, in preparation for a future trade, or with a view to acquiring or starting a trade.
• Activities aimed at acquiring a significant interest in another trading company or the holding company of a trading group or subgroup also count, provided the target is not already in the same group.
• Preparatory and acquisition activities only qualify if the trade is started or the acquisition is completed as soon as reasonably practicable in the circumstances.

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