Gains on certain types of business assets can be rolled over into new business assets if the new assets are acquired between one year before and three years after the disposal of the old assets. This ‘rollover relief’ can be available to both companies and individuals.
Sometimes a ‘new’ asset has been acquired before the ‘old’ asset has been disposed which means that under the time limits the relief ‘could’ be denied if the ‘old’ asset is not disposed of within a year of the acquisition of the ‘new’ asset.
I say ‘could’ because HMRC have discretion to extend this period to three years if they are happy that the taxpayer has been unavoidably delayed in selling the ‘old’ asset – for example using an example of farmland the ‘old’ land could have been held to ease the transition of activities to the new land.
Unhelpfully HMRC will only agree to an extension after the ‘old’ asset has been disposed of and it is not therefore possible to gain certainty before breaching a time limit. The issue needs to be argued out at a time when HMRC can see the tax on the line.
One possible solution to avoid uncertainty is to crystallise a capital gain within the defined time limit. For example an asset could be sold to a company.
Stamp Duty Land Tax (SDLT) can be a consideration here when land is concerned but the position here should be manageable due to the fact that the trigger for SDLT is generally treated as completion of contracts whereas the point of acquisition and disposal for capital gains tax purposes is generally exchange.
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