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Rollover Relief

I have a client who owns a garden centre personally and he has let this to his own personal trading company.

He intends to sell the garden centre and also his shares in the trading company, at the same time, and would like to purchase a fishery using most of the proceeds. We are considering whether rollover relief under s.152 TCGA 92 is available.

The HMRC manuals and Simon's Taxes make it clear the old and the new asset should be used in the same personal trading company.

The legislation at s.157 TCGA (personal company) is unclear on the situation although I have to say it does not look like it intends to dissalow relief in our circumstance.

This is impossible if you have, in our case, sold the personal trading company shares. We could set up a new personal trading company but the strict interpretation seams to be that rollover relief is not available. Also, what if he runs the fishery as a sole trader?

Do readers have any experience with making claims in such circumstances? It seams unfair that you cannot make a claim.

Many thanks in anticipation of your replies.

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By jlsTax
30th Nov 2012 13:44

TCGA S157

NorfolkFarmer

Looking at the wording of S.157 in detail, I think I agree with the interpretation in Simons / HMRC manual.

At S.157(b) the reference is to "the trade or trades in questions are carried on not by that individual but by a company which, both  at the time of disposal and at the time of the acquisition...."

This does seem to refer to a single company and not open it out to two difference companies.

Julian

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30th Nov 2012 13:56

Another solution

If he sets a new company to run the fishery could he not subscribe for shares in it and use the subscription to claim Enterprise Investment Scheme Hold-over relief.  This would postpone the gain until the eventual disposal of the EIS shares?  This would then have a similar effect.

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06th Dec 2012 09:25

Thank you to Julian and to you Paul.

I did start to consider EIS deferral relief, I suppose the fact the gain is only deferred, until new asset is sold, is no worse than the rollover relief.

The new trade is not on the excluded activities list so may well run with this option, once the sale goes through.

Many thanks for your time.

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