Classify the activity first
Whether an entity carries on a business of making investments depends on facts, including organised activities, scale, capital and staff resources. The category can cover companies, property trusts and LLP or LP partners. Trading investments for sale, passively holding them and actively managing retained investments have different tax treatment. A composite business may have a section 10D part and other activities, requiring a defensible allocation rather than one classification for all receipts.
Income-producing investments matter
Costs for investments producing no income are not deductible under section 10D. Qualifying expenses and ordinary capital allowances are limited to income from income-producing investments; unused balances are generally disregarded. Industrial-building and land-intensification allowances have separately described treatment allowing specified further utilisation. Identify each investment and its income production, then reconcile expenses and allowances. Business status does not automatically create ordinary trading-loss carry-forward treatment for every investment expense.
Official source
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