Where a company could be classed as a "trading" company rather than an "investment" company, BUT they purchase Corporate Bonds, which are within an insurance wrapper (https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/corporate-owned-bonds/) AND the amount held in the bond becomes their greatest asset, would HMRC move to treat the company as an investment company?
Presumably if the company purchased funds (EFT or Unit Trusts) directly without a bond wrapper, and those fund values were to outweigh any other business activity HMRC would deem the company a holding / investment company. Would that be the same where the funds are in bond?
For some broader context, the company concerned owns and lets residential property. The company actively runs the business and there are no agents involved. Their effort is significant and there is a strong argument that they are therefore a trading company. They now intend on maintaining their operations, but investing in a bond - which by its nature they would be passively holding. They want to be careful that the investment does not cause them to become classed as an investment company especially since their existing situation is already questionable (although likely weighted in their favour).
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