The First-tier Tribunal has allowed four Pontin family members’ entrepreneurs’ relief appeals over the sale of Highland Holdings Limited (HHL)
Nationalarchives. Its subsidiary, Associated Properties UK Limited (APUK), qualified as a trading companyNationalarchives although the only income it derived during the relevant period was rent from remaining tenantsNationalarchives. The decision turns on the company’s sustained preparations for residential development and the different purposes of its lettings.
The case concerned a 2016 disposal, with a one-year qualifying periodNationalarchives. The tribunal identified that period as 22 April 2015 to 22 April 2016Nationalarchives, when the buyer exercised its optionNationalarchives, although completion followed on 2 June 2016Nationalarchives. HHL’s only asset was APUK’s share capitalNationalarchives; it was agreed that the claims succeeded if APUK was a trading company throughout that periodNationalarchives.
HMRC conceded during the hearing that APUK undertook activities with a view to starting a tradeNationalarchives and started it as soon as reasonably practicableNationalarchives. The remaining question was whether its activities included non-trading activities to a substantial extentNationalarchives. The tribunal assessed physical activity, income, assets and expenditure together. Following Allam, it assessed the company’s activities as a whole, using both qualitative and quantitative measuresNationalarchives. No numerical threshold appliedNationalarchives.
APUK had decided in 2011 to develop its Henley-on-Thames property. Its directors and advisers undertook extensive work to secure the necessary neighbourhood plan allocationNationalarchives. The tribunal found a clear shift from investment to developmentNationalarchives. The property was held predominantly for redevelopment and sale, and the company had acted on that intention. Whether it could already be labelled trading stock was not decisiveNationalarchives.
Approximately £144,000 of rent came from short tenanciesNationalarchives designed to end easily without obstructing development. They covered costs, reduced business rates and avoided adverse publicity before the neighbourhood plan referendum. The tribunal regarded those arrangements as integral to preparations to tradeNationalarchives. By contrast, £324,000 from a longstanding Aggregate Industries lease remained investment incomeNationalarchives. The payment for surrendering that lease and ending a pre-emption agreement did not reduce the rent for this assessmentNationalarchives.
However, the investment income stream was being brought to an end in connection with the share saleNationalarchives. The tribunal also considered the development’s eventual profits exceeding £25 million, while retaining the focus on activities during the relevant yearNationalarchives. Taken together with the development work, purpose of the asset and expenditure evidence, the factors did not establish materially important non-trading activitiesNationalarchives. The tribunal distinguished APUK from the company in Allam: APUK’s development decision had significantly changed its rents and property managementNationalarchives.
The decision in Alan Pontin & Ors v HMRC [2026] UKFTT 1166 (TC)Nationalarchives applies the trading-company test in section 165A of the Taxation of Chargeable Gains Act 1992Nationalarchives.
For comparable relief claims, document the development work, purpose and termination terms of lettings, and the company’s physical and financial activities throughout the relevant qualifying period.
