CTM34560 | Residence: dual resident companies: definition - investing company

Companies engaged in ordinary trading activities are generally excluded from the scope of the legislation. This is done by specifying conditions A, B and C, any of which, if met, prevent the company surrendering losses or other amounts and make it a dual resident investing company rather than by attempting to define what is meant by a 'company engaged in ordinary trading activities'.

The conditions are:

Condition A

The company is not a trading company throughout the surrender period.

Condition B

In the surrender period the surrendering company carries on a trade of such a description that the company’s function, or one of its main functions, consists of one or more of the following activities:

1. Acquiring or holding shares, securities or investments of any other kind (directly or indirectly);

2. Making, under the loan relationships provisions, payments under which debits fall to be brought into account for the purposes of CTA09/PART5;

3. Making payments which are qualifying charitable donations;

4. Making payments similar to those in activity 3 but which are deductible in calculating the profits of the surrendering company for Corporation Tax purposes;

5. Obtaining funds for the purposes of, or otherwise in connection with, activities 1 to 4.

Condition C

In the surrender period the surrendering company carries on one or more of the activities in activities 1 to 5

• to an extent that does not appear to be justified by any trade that it carries on, or

• for a purpose that does not appear to be appropriate to any such trade.