VCM91140 | CVS: investors and reliefs: non-financial activities requirement: single company: definition of non-financial trade

FA00/SCH15/PARA10(2) & PARA11

The requirement in respect of a single company is that it must exist wholly for the purpose of carrying on a non-financial trade. A non-financial trade is defined at FA00/SCH15/PARA11 as one which is conducted on a commercial basis and with a view to profit and does not consist, either wholly or as to a substantial part (see VCM91170), of financial activities. There is no definition of ‘financial activities’, but paragraph 11 mentions certain activities which are covered. The list contains not only items such as banking and insurance, which are mentioned as financial activities at FA00/SCH15/PARA26 (1), but also such activities as dealing in shares, futures and options.

In determining whether a company exists wholly for the purpose of carrying on a non-financial trade the following are to be disregarded:

• purposes which have no significant effect on the extent of the company’s activities, except in relation to incidental matters,

• the holding and managing of property used by the company for a non-financial trade,

• the holding of any shares to which investment relief is attributable - unless the holding of such shares forms a substantial part of the company’s business.