Does hold over claim need to be amended?

If the use of an asset later changes, does this impact on the historical hold over claim?

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A number of years ago, the proceeds of a qualifying disposal were rolled into the purchase of another qualifying asset, and hold over relief was claimed under s165 TCGA 1992.

It now appears that in the last few months, part of the asset has ceased to meet the qualifying conditions.  

Consideration was given at the time to any non-qualifying element and any restrictions required, but does the calculation of the hold over claim need to be be revisited now due to the current lack of qualifying status of part of the asset?

The original transaction/claim was more than four years ago so is now out of time for amendment, but going forward, the base cost recognised (reflecting the hold over claim) must need to be accurate?  Does the timing of the change of use make any difference - what if the original transaction was last year and six months later there was a change? 

Replies (5)

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By The Dullard
12th Nov 2021 10:25

Eh? Are you talking about holdover relief under s 165 (which doesn't require reinvestment of proceeds - indeed it contemplates nil proceeds) or rollover relief under s 152.

Once I'd determined which of the two I was concerned with, the first thing I'd do is read the relevant provisions.

What s 152 requires is that the new assets are taken into use, and used only, for the purposes of the trade ON ACQUISITION. It doesn't really trouble itself with the fact that there may come a time when the new assets aren't used only for the purposes of the trade. Obviously such use might impact on the availability of a further rollover relief claim in the future.

Similarly, s 165 only concerns itself with what the asset is used for at the time of the transfer.

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By Tax Dragon
12th Nov 2021 10:38

Agree with Dulls.

There might be a clawback at a later date (a classic example is s241(6)), but nothing happens at the time of the change.

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Replying to Tax Dragon:
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By Tax Dragon
12th Nov 2021 11:06

In fact there's always a clawback at a later date, because base cost is reduced. That's how ROR works. D'uh.

What was Tax Dragon saying earlier about cracks in the façade?!

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Replying to Tax Dragon:
By ianthetaxman
12th Nov 2021 11:06

To err is human...

But well caught nonetheless!

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By ianthetaxman
12th Nov 2021 11:05

@The Dullard - yes, my fault, wrong section quoted, and thanks for confirming the position.

@TD - likewise.

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