Jurisdiction(s):
United Kingdom

UK FTT (Tax): LLP was trading for Business Asset Disposal Relief; Mansell test met despite no sales until 2019 (Wardle v HMRC [2024] UKFTT 543 (TC))

Published on: 02 July 2024

Published by a LexisNexis Tax expert

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Wardle v HMRC [2024] UKFTT 543 (TC)

The taxpayer held a 15% stake in the LLP, established in June 2015 as a special-purpose vehicle created to build and operate a power plant in Hull. In August 2015, the LLP raised an unsecured loan from a funder and proceeded to enter into more than 50 contracts with a range of counterparties concerning construction, operation and financing of the plant. During 2016, the LLP applied to the Environment Agency for a permit to operate the plant, and that authorisation was granted in May 2017. Commissioning of the plant was formally certified as complete in March 2018; however, no electricity was generated on a commercial basis until June 2019. The taxpayer then disposed of his interest in the LLP in February 2020. He claimed entrepreneurs’ relief in respect of that disposal but, following an enquiry, HMRC refused the claim. HMRC’s stance was that the LLP was not trading throughout the two years immediately preceding the disposal because it had not...

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