United Kingdom Special Commissioners of Income Tax Decisions

Spc00687

Inheritance tax - Whether the shares in a company that claimed always to have been a land development company were shares in a company "making or holding investments" so as to preclude business property relief under section 105(3) IHTA 1984 - substantial amount of rent received in respect of properties that had been let - Appeal allowed

THE SPECIAL COMMISSIONERS

THE EXECUTORS OF MR D W C PIERCY (DECEASED) Appellants

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Special Commissioner: HOWARD M NOWLAN

Sitting in public in London on 14 May 2008

Michael Collins, counsel, for the Appellants

Colin Ryder of HMRC, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

Introduction

1. This was an appeal raising the single question of whether the shares in a company, Temple Lodge Limited ("Temple Lodge"), were shares in a company "whose business consisted wholly or mainly … in making or holding investments". The question has to be answered as at the date of the death of Mr. David Piercy, the managing director and a major shareholder in the company, on 24 October 1999. If the shares were shares in such an investment company then section 105(3) IHTA 1984 would deny business property relief in relation to the value of the shares on the relevant death. If the Appellants sustained the argument that the company was a property development company whose holdings of land ranked as stock, and if the substantial amounts of rental income received by the company did not undermine this claim, then the shares will have qualified for 100% relief from Inheritance Tax.
2. The contentions on behalf of the Respondents relied to a great extent on simply balancing the level of rental income received against other profits, and asserting that the substantial levels of rental meant that the company's business consisted of holding investments. It was also contended that the Corporation Tax treatment of the company, invariably as a trader, was not relevant to the Inheritance Tax question.
3. The only witness was the son of the late David Piercy, namely Mr.Michael Piercy, who was, and had been for many years, a director of the company. In his evidence Michael Piercy explained how the company's business had always been, and now remained, that of a development trade, marshalling sites for development with a view to the sale of finished developments. He explained why it was that in recent years the company's activity has been very sporadic and slow. He also explained how it was that the company came to have a number of properties that were producing rents without this feature indicating that stock had ever been appropriated as investment capital, or that the company's business had ever changed from being that of a trader to that of an investment company. I found Michael Piercy's evidence convincing. It follows that, because I accept that all of the company's land remained stock, notwithstanding the receipt of rentals, such that none of the land was appropriated as investments, I allow this appeal and decide that the company was not an investment company.
4. A certain amount of confusion existed in my view because the case advanced on behalf of the Respondents addressed the question by concentrating on the relatively disproportionate amounts of rental received in contrast to trading, or "realisation" profit. Such an approach may be appropriate in cases such as that involving the farmer who trades as a farmer, and also holds other farmland (all plainly being capital) as an investment to rent it to others. It may again be appropriate in the case of the caravan site operator who holds land as capital, and receives investment income in the shape of fees or "licence fees" for the use of land, also receiving many other fees for trading activities. In both of these cases, the businesses in question hold all the relevant assets as capital, and trade with some of the capital, and also derive rent and investment income. The question then is the "wholly or mainly" issue of balancing relative amounts of income, and activity. The difference in this case is that the contention on behalf of the Appellants that succeeds is that all the land acquired by the company was acquired as trading stock; much land had been realised outright in a trading sense (and Corporation Tax then been charged on the basis that the company was and is a trader); and a convincing explanation has been given as to why the retention of some land, and resultant receipt of rentals, did not mean that that land had been withdrawn from "stock" and appropriated as "investment land". Since thus the company does not hold its land as investments, it cannot be conducting the business of acquiring or holding investments.

The relevant law in this case

5. I will first summarise two of the basic legal points that seem to me to govern this case.
6. Firstly, I should mention a point on the interpretation on section 105(3) IHTA 1984 that, if ignored, could lead to some confusion. Section 105(3) states that:
   

"Shares in … a company, are not relevant business property if … the business carried on by the Company consists wholly or mainly of one or more of the following, that is to say, dealing in securities, stocks or shares, land or buildings or making or holding investments."

This subsection provides that shares in two categories of company that hold land do not qualify for the business property exemption, those two categories of company being "land dealing companies", and "companies making or holding investments [in land]". The point that I should clarify is that it has long been accepted that a building company (that generally of course buys land, builds on it, and sells it off in a trading or dealing manner) is not for this purpose "a land dealing company". Equally it follows from the fact that the Respondents have specifically confirmed that they are not contending here that the company was, at the date of the relevant death, a "land dealing company", that a company whose business it is to acquire land with a view to promoting a development, and then realising the developed land once sub-contracted building work has been completed, is also not a "land dealing company" for the purposes of the section 105(3) definition. The only type of land dealing company whose shares fail to qualify for the relief is thus some sort of dealing or speculative trader that does not actively develop or actually build on land. At no stage in this case was it contended that the shares in the company here forfeited business property relief on this alternative ground. The only question was accordingly whether the company was, at the date of the death, "a company whose business consisted wholly or mainly in the making or holding of investments".

7. The other point that I should make is both a general legal point and one embedded in Income Tax and Capital Gains Tax law. This is the seemingly obvious proposition that if a company is to be said to be conducting the business of holding investments, then the company must have got some investments. The reason why this appeal fails is that on the facts and evidence of Michael Piercy, I conclude that this company had no investments.
8. I naturally accept that a company that buys land with a view to developing it and realising it might change its mind and choose to hold the developed land indefinitely with a view to taking the income therefrom. Or it might sell part of the developed site, and retain the balance with the same intentions. The appropriate description of this change is then that the company would have appropriated its stock as capital; the company would thereupon have a Corporation Tax liability on income profits up to the value of the land at the point of appropriation (on Sharkey v. Wernher Lines [1956]AC 58) and the company's base cost for its investment would be determined by section 161(2) Taxation of Chargeable Gains Act 1992. To clarify this proposition that seems to me to be obvious, the wording of that subsection provides that:

"If at any time an asset forming part of the trading stock of a person's trade is appropriated by him for any other purpose, or is retained by him on his ceasing to carry on the trade, he shall be treated as having acquired it at that time for a consideration equal to the amount brought into the accounts of the trade in respect of it for tax purposes on the appropriation or on his ceasing to carry on the trade, as the case may be".

9. The resultant differences in tax treatment are of course very significant, principally because on appropriation, the value of unsold retained land would be brought into the trading calculation at market value, and the profit taxed, whereas at present unsold stock has presumably been brought into the closing stock valuation at the lower of cost and market value, so effectively recognising neither gain nor loss in relation to the development of unsold land. Later sales of retained land would also have benefited from indexation, when taxed on capital gains lines following an appropriation, whereas in fact all profits have been treated as income profits in this case.
10. The Appellants' argument in this case is that while some land has been retained, that land has not been appropriated as an investment. In perhaps the most important example of all, the Company realised that a residential development in Islington had been blighted for decades by various rail link proposals and latterly by the Channel Tunnel extension, which runs beneath the land in question. As a consequence the Company put up some poor quality small industrial workshops, which provided some income and constituted the only sort of development that the company was able to effect during the long period of uncertainty. The workshops have always been let on short-term leases so that if a residential development became possible, the leases would not be renewed on their expiry, the workshops (which are now in a poor state) would be knocked down and the always envisaged residential development would proceed. On the basis that the unchallenged evidence from Michael Piercy was that the company's intention always remained to undertake this residential development, with the houses or flats all being sold on completion, I consider that this fact pattern amply justifies the proposition that this valuable site has always been retained as trading stock, and it has never been appropriated as an investment, regardless of the fact that the units have temporarily been let to tenants. I will need to summarise the facts in relation to other sites below, but I simply give this example now as an example of how the receipt of rental income may well not indicate that there has been an appropriation, and that the land is thus not held as an investment.
11. In relation to the law, I should also accept that I must address the facts in this case and reach and justify a conclusion as to whether the land held by Temple Lodge has all been retained as stock, as I suggest in the example above. And in approaching that question, I accept that the earlier, and indeed the current, treatment of the company for Corporation Tax purposes is in one sense irrelevant. The sense in which it is irrelevant is that I must address the current question on the facts and the law, and whether people in the past have failed to take appropriate points when dealing with the company's Corporation Tax treatment is secondary. What I do say, emphatically, however is that if the conclusion in this case was that business property relief was to be denied because the company's business was that of holding investments, then a great many trading calculations, and ordinary Corporation Tax points would have been wrongly missed over many years. For in this case, unlike the farming and caravan site cases that I alluded to, the two taxes do in this respect go "hand in hand". The point is as simple as the proposition that a company whose land is stock does not thereby hold investments, and if the company does not hold investments, its business cannot be that of holding investments.

The facts in more detail and the contentions of the parties

12. Most of this case is about the facts, and the proper analysis of them. They were presented to me in a slightly muddled manner in that they were spread between a historical witness statement provided by Michael Perry, and then supplemented by schedules showing properties developed at different times, the facts and intentions as regards properties held at the date of the death of David Piercy that occasioned this appeal, and schedules of rental receipts, and the relatively low trading profits. Since the contentions of the respective parties are comparatively simple and short, I will summarise them first.

The contentions on behalf of the Appellants

13. In short the Appellants' contentions were that Temple Lodge was manifestly a land development company whose land was held as stock; that there had never been any appropriation of land as an investment; and that the facts in relation to all the land retained at the date of the relevant death sustained this analysis.

The contentions on behalf of the Respondents

14. The contentions on the part of the Respondents were that:

1. the vastly disproportionate amounts of rent received, contrasted with low or nil realisation profits meant that on the balance of activities test propounded in Farmer v. IRC[1999] STC (SCD) 321 and in IRC v. George and another (executors of Stedman deceased) [2003] EWCA Civ 1763. [2004] STC 147, the company's business has to be regarded as mainly one of making and holding investments; and

2. "looked at in the round, during the 1990s and probably earlier than that, the company had changed from being an active property development company to one which mainly let its stock of property on leases of varying lengths to generate income and as such falls within section 105(3)".

3. It was specifically confirmed by the Respondents that the only ground on which it was suggested that the company was covered by the definition in section 105(3) was as an investment company, and not as a land dealer.

The facts in more detail, coupled with the various steps in my decision

Background and general

15. This appeal relates only to the one company, Temple Lodge, and indeed to the status of that company at the time of the death of Mr. David Piercy in October 1999, but there is still some significance to the background history that was explained to me.
16. According to the evidence of Mr. Michael Piercy, the family's development business commenced at the end of the 19^th Century. For approximately twenty-five years at the very end of that century, and into the 20^th Century, the founder of the business, Charles Day (Michael Piercy's great-grandfather) had been building a large number of houses in North London as a sole trader, operating from 1905 from the office at 705 High Road, North Finchley, from where the family businesses have been run ever since. The business was incorporated in 1921 when Charles Day formed his first company.
17. The deceased, David Piercy, was the son of one of Charles Day's daughters. David Piercy qualified as a chartered surveyor and entered the family business in the 1940s. It appears that the business was then operated through a number of individually owned "family" companies. Thus Temple Lodge was formed in 1947 as David Piercy's personal development company, whilst his brother, Ralph, owned a similar company, and the two of them jointly owned a third company. No particular evidence was given about other companies than Temple Lodge but periodic reference was made to five family companies sometimes co-operating in a particular development, and in all the references to different companies, it sounded as if all were development companies or management services companies, and no single reference was ever made to a property investment company.
18. Rather curiously, Temple Lodge started its life as a development company on the wrong foot because the objects clause of its Memorandum of Association contained the classic objects for an investment company. I regard this as being no more than an unfortunate mistake made by the solicitor who formed the company (possibly the same solicitor who appeared to have been something of a property law expert) because there is not the faintest doubt that the business of the company commenced as a trading and property development business and not that of investment. This is made clear by the fact that David Piercy was said to have had a particular expertise in "locating and assembling development sites, arranging finance and generally making development schemes "happen"; by the fact that David Piercy and Mr. George, the company's solicitor, evolved the now common system of marketing flats on a long lease, and ground rent, basis, so that flats could be sold individually; and by the fact that on my calculation Temple Lodge developed and sold 256 flats in North London between 1950 and the early 1970s. I should mention that the building work was always sub-contracted, but this in no way derogates from the trading and developer status of Temple Lodge.
19. The first step in my decision, therefore, is that Temple Lodge unquestionably commenced its life as a property development, and not as an investment, company. I think that this was conceded by the Respondents, notwithstanding that at one point in correspondence they tried to make something of the mistaken form of the objects clause of the Memorandum of Association.

The second period of activity from the early 1970s to the mid 1990s.

20. During the 1970s it appears that the Directors of Temple Lodge recognised that the residential development business was largely by then dominated by much larger companies than their company, and indeed larger than the Day/Piercy family companies generally, and the directors thus sought out a new niche development opportunity. This they found in the shape of small community, or "out of town centre", shopping arcades, generally comprising a row of shops with flats over, parking areas for customers and a row of garages for the shop-keepers.
21. These developments posed problems that had not been encountered with the earlier flat developments. Although I have given the total number of flats sold in the earlier period, that has obscured the fact that individual developments were often of only 2, 4 or say 8 flats, so that when a site was often acquired with existing planning permission, bank finance was usually available for the fairly short construction period and thus the developments did not span over several phases and many years. By contrast the shopping precinct developments often involved numerous lengthy planning application and problems, difficulties in arranging finance for longer term developments, the inevitable need for the small company (and other small companies, where projects were shared with other family companies) to develop in several distinct phases. When Temple Lodge came to market the flats and shop units it also found that the prices achievable were heavily influenced by the expected profitability of the new shops, which was often dependent on there being, say, a good super-market in the development as an "anchor tenant", such that purchasers of the other units could assume a reasonable clientele in judging their own likely profitability.
22. One of the consequences of Temple Lodge's decision to move into shopping centre developments, and of the feature that they were undertaken in phases and that parts of the site could not be sold outright but had to be leased at full rentals for reasons that I will summarise below was that the company could not proceed with anything like the number of developments as in the 1950s to 1970s. These various features made it difficult to secure bank finance, particularly in years when there were strict limits to bank lending, and inevitable that some of the company's fairly modest working capital was left tied up in part-completed developments, rather than being available for another project. I was also told that planning delays meant that the few developments that the company was progressing in the 1980s and early 1990s also dragged on for very long periods.
23. Notwithstanding these delays and the resultant slow level of trading, I am convinced that the company continued to trade at all times. Mention was made of various sites that were researched to various preparatory levels either involving planning applications, or instruction of architects and contract negotiations and many came eventually to nothing. During the 1990s the company was embroiled in a loss-making development at Park Road in London, where it sold its interest to other family companies part way through and continued in a management role; and it certainly bought back a couple of derelict units in a shopping arcade in Hazlemere, Buckinghamshire that another family company had developed in the 1960s and sold two flats, that had been re-developed at a cost of more than £100,000, in 1993.
24. Beyond saying that the company never seemed to me to cease to trade, two other points are very important. First during the 1990s, the company certainly never purchased any land actually as an investment. I must examine below the more difficult question of whether the company appropriated parts of shopping centre developments that had been completed, or more often part completed, as investments, but to the easier question of whether a property was ever acquired as an investment, the answer it seems to me was that it never was. I understand that a couple of poor industrial units were bought in the Roman Way site and let, but here the intention was obviously to complete an assembly of land that would eventually enable all these units to be knocked down, facilitating a very profitable residential development in Islington.
25. The other point to mention is that after the death of Charles Piercy, Temple Lodge undertook a very material development of Office or Industrial units in Milton Keynes, and pending the sale of the 6^th and last unit, is apparently now being induced by the Council to commence a new development of twice the size. I appreciate that it is the nature of the company's business in 1999, and not after that date, that is in issue in this case, and that it is theoretically possible for a company to switch its activities twice, first from development to investment and than back again, but that is far fetched. It seems to me that at all times this family has had development in the blood. Slow activity in the mid to late 1990s may be accounted for by market conditions, or possibly by involvement in the affairs of other family companies, or by failing to find suitable sites, but to the question of whether I can detect an intention to change the whole business of the company from that of property development to property investment, with for instance properties (or indeed one single property) being acquired for investment purposes, the answer is that I can detect no evidence whatever of that intention.
26. The second step in my conclusions, accordingly, is that just as this company plainly commenced its activity as a development company, and not as an investment company, I am equally satisfied that it never formed a deliberate intention to acquire properties as investments, or to hold properties for their income potential as a deliberate policy act, and thus to change its deeply engrained business model.

The appropriation question, the two possible questions in relation to appropriations, the levels of rentals and my conclusions

27. I have already said that it is perfectly possible for the company to have retained unsold stock, and appropriated it as an investment, whilst still conducting the development trade, and I must now address that question.
28. The evidence given by Michael Piercy satisfied me (not that he was cross-examined by the representative of the Respondents on this aspect) that the company never embarked on one of its few shopping centre developments with a view to making a profit on sold parts, and retaining the balance as an investment. There are two possible scenarios that I must test in relation to the critical appropriation question. One is the question of what the right analysis would be if a trader commenced a project by intending to sell everything, and then found that there were parts that simply could not be sold outright. Rather than him deliberately intending to retain them, he simply "gets landed with the residue", and in this case lets the residual units or the shopping centre at a rental because that is all that he can realistically do. Is the analysis then that he has reluctantly appropriated the residue as an investment, or is it that a trader has just done what he is forced to do with a slow stock line, such that all his actions remain actions in the course of trade? This is one question. I accept that the proposition that the developer was landed with unsold units in a shopping centre development would become a little thin if this occurred repeatedly, but nevertheless the "reluctant retention" question is one that I may have to answer.
29. There is however another possible factual explanation of the retentions of a certain element of part-completed developments, and this is the explanation that was implicitly advanced by the Appellants. This was that there was always a development motivation for the retentions. Some areas were let at full rentals to preserve control over the site and facilitate phase three of a development. An anchor tenant had to be secured, and could only be secured on a rental basis, to render other units saleable on more advantageous terms. And in the case of Roman Way, small industrial units were thrown up and let on 5-year terms in the hope that after decades (at least 20 years) the planning blight through rail proposals would end and at long last a very profitable residential development would become feasible. In other cases leases would be granted at rentals, with a view to a reasonably long tenancy to a good tenant being sold to a pension fund or insurance company. Self-evidently in these situations the case for saying that the company has appropriated stock as investments is either weaker or just not tenable. The question for me therefore, is why the company had retained a number of residues of developments that generated rents. And is the explanation the one suggested in paragraph 28 above or is it the one advanced in this paragraph, and would either of them sustain the case that the properties have been appropriated from stock as investments?

The levels of rents

30. The rentals received by Temple Lodge in the accounting period in which the relevant death occurred were approximately £253,000. The Respondents produced figures to show the relationship between that rental income and the remaining trading income. These might if anything have understated the disparity because when trading income included fees for services rendered to other family companies, rather than trading profit on the realisation of developed properties, and it is that ratio that is more relevant, there will have been a few periods, in a time of very slow activity, when there may have been virtually no development profits, all to be contrasted with significant rental income.
31. Whilst the total rentals received in the period ending March 2000 were £253,000, the contentious rents were of the slightly smaller amount of £212,000, the difference being ground rents. Where properties have been sold outright on long lease for a full premium, and a trivial ground rent has been reserved, that is a classic method of disposing of a developed property, and the accumulation of ground rents if anything supports the development, rather than the investment case. The still significant rental figure of £212,000 appears to me to derive essentially from five properties, namely Besselsleigh Road (£77,000); Edmonds, Lane End, Bucks (£13,000); Park Parade (£14,000); Swains Market (£21,000), and Roman Way, Islington (£87,000).

The properties held by Temple Lodge at the date of the death of Charles Piercy

32. I will now consider the facts in relation to each of the properties held by Temple Lodge at the date of the relevant death, considering in particular those where the significant rentals just listed were being received.

Besselsleigh Road, Lower Wooton, Oxon

This was a shopping centre development where two phases had been completed, and it is still hoped to undertake the third. In the words of a Schedule to Michael Piercy's witness statement, "The company retains land for further development on the opposite side of the service road serving the existing buildings and it is the company's intention to pursue the development of that area at an appropriate time having regard to market conditions and until the site is fully developed the company will retain control over the freehold of the site to prevent objections being raised by existing traders to further commercial development. This property has always been and remains a development site with further development opportunities to be realised." Expanding on that it was asserted that by letting existing shops (having sold outright the flats and the garages) rather than by selling long leases for a premium and merely reserving ground rents, there would be more control over moving site roads, and progressing the third stage of the development, and this evidence was not questioned in cross-examination.

Edmonds Shopping Centre, Lane End, Bucks

This was a development of 7 units, again comprising shop units with flats over and a garage. In the words of the Schedule, "The shopping centre was built in a residential area and to dispose of the units on advantageous terms it was necessary to let units 5 – 7 on a long lease of 35 years to "anchor" the centre with a food supermarket. This enabled units 1 – 3 to be let and sold freehold each with a garage. In December 1985 the flat forming the upper part of unit 4 was sold on long lease, and in 1990 the freehold of unit 4 was sold with garage. Having disposed of units 1–4 the company's intention has been and remains to sell units 5–7. The company considers that it will only obtain the best overall price when it is able to sell the flats in the upper part with vacant possession and the balance as a commercial investment. The property is the residue of a development undertaken by the company."

Park Parade, Hazlemere, Bucks

This is a development to which I have referred in mentioning some of the few sales in the 1990s in that two units in this parade, that had been developed by another family company in the 1960s,were bought by Temple Lodge, and others by another family company in about 1990. Temple lodge renovated the units, sold the maisonettes and "considers that the true rental value of the ground floor shops will not be achieved until not only is the new supermarket fully established, but the true rental value of the supermarket has been obtained at a rent review under the lease of the supermarket following a period of successful trading. That time has not yet arrived". I should add that it was another family company that had acquired and re-developed the supermarket.

Swains Market, Flackwell Heath, Bucks

This had been a 1960s development by the company of a small development of six shops. "Four had been sold shortly after the development and one unit was subsequently repurchased to achieve better control over the management of the parade as a whole pending realisation of the remaining units. Two of the flats have been sold on long leases, one in 1990 and one in 1995 as opportunities have arisen. The company still expects to realise at some stage the vacant possession value of the remaining flat and will then be able to contemplate the disposal of the shops on advantageous terms." This site was further complicated by the fact that it had been hoped that a greater development would have been possible if and when a coal yard ceased trading. This hope was not fulfilled because although the coal yard ceased trading, the owner refused to sell.

Roman Way, Islington

I have already referred to this site, which is clearly the most valuable still held by the company. The facts here are very clear indeed to me, in that development of the hoped for residential houses or flats in a complete, but small, road in Islington was long thwarted by planning blight, concerning the North Cross Route, and latterly the Channel Tunnel Rail Link. When planning permission for a residential development was refused, fairly poor industrial units were erected both for Temple Lodge, and other family companies (that owned different parts of the total site). The industrial units were "in the main industrial sheds with limited life. The estate as a whole is being retained by Temple Lodge and other family companies in the belief that in the course of time there will be redevelopment opportunities which will produce better returns, perhaps in the form of a large residential development." It now very much looks as if this hope will be realised in that the final construction of the rail link has been completed, and it has been confirmed that the site will withstand the construction of five-storey buildings. Accordingly on the expiry of the short tenancies of the workshops, it should be possible for this whole site in an otherwise entirely residential area of Islington to be re-developed, which is, and has always been, the intention.

Other properties held at the time of the death

Other properties in (i) Slough, (ii) Pickering Street, London, N1, (iii) Piper Close, London N7 and (iv) Bittacy Hill, London NW7 that were held at the date of the death appear all to have been classic development sites that generated no rental income. Many have been sold in subsequent years, and it is the intention to sell the remainder.

Conclusions to be drawn in relation to possible appropriations

33. None of the various assertions as to why properties were retained generating rental income was particularly questioned or doubted by the Respondents, because the Respondents' case was advanced largely on the grounds that the preponderance of rents over realisation profits was itself decisive, or on the ground that the level of rents meant that the company's business must have changed from that of development to investment. I am not thereby suggesting that the Appellants' assertions were open to doubt or that it was possible that evidence was being manipulated to enhance the Appellants' case, but simply saying that the evidence was perfectly tenable, and it was not subjected to scrutiny. In the light of this, and also because I found the evidence convincing because it seemed that this family had property development in the blood, I accept all the above evidence.
34. It therefore seems to me that, reverting to the two possible rationales for retention of properties, with the resultant significant receipt of rents, the explanation lies far more in the sphere of various motives geared to protecting and eventually later realising future development potential, rather than the alternative explanation of the company simply being "landed with various unsaleable interests" such that various residues of developments had to be let. In the light of this and because I consider that the first explanation is utterly inconsistent with any contention that the properties were appropriated from stock to investment, my decision is that this company held none of its properties as investments. And as I have already said, the rather self-evident point is then that a company with stock, but not investments, can hardly be treated as conducting the business of acquiring and holding investments.

This appeal is accordingly allowed.

HOWARD M NOWLAN

SPECIAL COMMISSIONER

RELEASED: 9 June 2008

SC 3149/2007