Corporation Tax Act 2010 Explanatory Notes

Section 1071: Companies not carrying on a business

3126.This section restricts the application of the rules about distributions in the case of a company that does not carry on, or has never carried on, a trade or a business of holding investments nor has held an office. It is based on sections 6(4), 490(4) and 834(2) of ICTA.

3127.In such a case the rules about distributions are limited to amounts distributed out of taxable profits or franked investment income.

3128.Although the section reflects the application of the definition of “trade” in section 6(4) of ICTA, as applied to section 490 of ICTA by section 834(2) of ICTA, the term does not include any reference to a profession or vocation. See Change 4 in Annex 1.

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