A company’s trading status is considered by looking at all its activities and circumstances.

Investment businesses, such as property rental businesses are often unlikely to meet HMRC’s conditions. A company or business is not regarded as trading if it has substantial non-trading activities. HMRC will look at income from non-trading activities, asset held and how they are used, expenses incurred by employees and the company’s history.

Where investment or non-trading activities are more than about 20% of all activities then a company is “not wholly” trading. Ex-trading premises and rental income may also cause problems.