Jowett v O'Neill & Brennan Construction Ltd

CH D 1998, 70 TC 566; [1998] STC 482

A company appealed against a corporation tax assessment, contending that it was entitled to small companies' relief under ICTA 1988, s13. The Inland Revenue rejected the claim on the basis that there was an associated company and, consequently relief was not due, by virtue of ICTA 1988, s13(3). The company appealed, contending that W was not carrying on a 'trade or business' during the period in question, it should be disregarded by virtue of ICTA 1988, s13(4). 

It was held that since the company had carried on no trading activity during the period in question, it should be considered inactive for the purposes of calculating small companies’ relief, as it had carried on no trade or business during the period.  The fact that it had substantial sums of money in a bank account and had received interest accordingly was considered irrelevant.