Corporation Tax Act 2010 section 18N

Close investment-holding companies

Section 18N defines what makes a close company a "close investment-holding company" for the purposes of the small profits rate provisions, and sets out the permitted purposes that allow a close company to avoid that classification.

• A close company is a close investment-holding company in an accounting period unless, throughout that period, it exists wholly or mainly for one or more permitted purposes such as carrying on a commercial trade or making commercial lettings of land.
• Permitted purposes also include holding shares in, lending to, or coordinating the administration of qualifying companies, as well as supporting the trading or property investment activities of qualifying companies or a controlling company.
• A letting of land is treated as commercial unless it is to a person connected with the company, or to certain family members or spouses or civil partners of connected persons.
• Where a company was not a close investment-holding company in the accounting period ending immediately before a winding up begins, it will not be treated as one in the subsequent accounting period during the winding up.