B1.426 Realisation of assets by personal representatives
It is necessary to consider whether personal representatives are carrying on business in the course of administering an estate. In doing so, it is necessary to bear in mind that it is their duty to realise the assets to the best advantage and that, in order to do so, they may have to complete transactions which had been embarked upon by the deceased. This does not of itself constitute the carrying on of a trade by them.
In Cohan's Exors v IRC1, a testator had entered into a contract to purchase a ship and died before he had paid the whole of the price. The purchase was completed by the executors and the ship was resold to a single shipping company formed for the purpose. It was held that they were doing no more than realising an asset to the best advantage or, alternatively, preventing loss to the estate, and that they were, therefore, not carrying on a trade.
In the case of Weisberg's Executrices v IRC2, however, the decision went the other way. The personal representatives were not empowered by the will to continue the business and they unsuccessfully advertised it for sale as it stood. It was decided, therefore, to wind the business up as soon as was practicable and the customers were informed. The premises were kept open for the sale of goods for about nine months, but the tenancy was then terminated by arrangement. The remaining stock was disposed of and