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For accounting periods beginning on or after 1 April 1989 until 31 March 2015, regardless of whether it is in business a close company that simply holds investments such as a bank deposit
account will fall within the definition of a close investment holding company at CTA10/S34, and will be liable at the full rate of CT (see CTM60700 onwards).
Some companies will seek relief for management expenses under CTA09/S1219, which requires that the company carry on 'investment business', defined without much further enlightenment at
CTA09/1218 as making investments. In such cases, it is a reasonable inference that the company is also carrying on a business for the purposes of CTA10/S25 (3).
A company wishing to take over the trade of another may do so by first acquiring the target company’s shares and then transferring the trade to itself. This is commonly known as a hive-up.
In some cases the transfer of the trade takes place on the same day as the acquisition of the shares.
Whether the acquired company carries on a trade or business during the period after acquisition of the shares and before transfer of the trade is a question of fact. But the normal sequence
of events in a hive-up is that the predecessor must carry on the trade (even if only for a few minutes) while it is in common ownership with the successor. There is no reason to overlook
such very short periods of trading.
CTA10/S26 provides that a non-trading holding company is not treated as carrying on a business, and is therefore excluded from the count of associated companies for an accounting period,
provided that in relation to or throughout the period: