Section 74C — Finance Act 2008: Meaning of “non-active capacity” for purposes of sections 74A and 74B etc

Meaning of “non-active capacity” for purposes of sections 74A and 74B etc 74C 1 For the purposes of sections 74A and 74B an individual carries on a trade in a non-active capacity during a tax year if the individual—

a carries on the trade at a time during the year, and b does not devote a significant amount of time to the trade in the relevant period for the tax year.

2 For the purposes of this section an individual devotes a significant amount of time to a trade in the relevant period for a tax year if, in the relevant period, the individual spends an average of at least 10 hours a week personally engaged in activities of the trade and those activities are carried on—

a on a commercial basis, and b with a view to the realisation of profits as a result of the activities.

3 For this purpose “ the relevant period ” means the basis period for the tax year (unless the basis period is shorter than 6 months).

4 If the basis period for the tax year is shorter than 6 months, “ the relevant period ” means—

a the period of 6 months beginning with the date on which the individual first started to carry on the trade (if the basis period begins with that date), or b the period of 6 months ending with the date on which the individual permanently ceased to carry on the trade (if the basis period ends with that date).

5 If—

a any relief is given on the assumption that the individual devoted or will devote a significant amount of time to the trade in the relevant period for a tax year, but b the individual in fact failed or fails to do so, the relief is withdrawn by the making of an assessment to income tax under this section.