Sale of farm buildings

Sale of farm buildings

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I have a client who bought a farm in 1990.  At that time, it was a working farm and remained so for approximately 12 years.  The farm consisted of the farm house (main residence of family) and 3 other barns.  One of the barns was partially converted into a residential property and subsequently rented out.  The other 2 barns now have planning permission to be converted into residential properties and the owners are about to sell them.  Each barn has a value of between £50-£60K and the whole farm was purchased in 1990 for approximately £227K.  Am I right in thinking that we would need to value the barns as at the date of purchase and then work out the CGT in the usual way?  Am I missing anything?  I can't see that ER would be applicable and the money will not be reinvested in another business asset so no rollover relief.

Many thanks for your help once again

Replies (5)

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By blok
13th Feb 2014 15:48

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I think you have got this right.

Base cost of capital assets (barns)  needs to be apportioned as you say.

No ER, unless ceasing to trade at around same time.

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By blok
13th Feb 2014 16:01

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hold that thought.

 

do we have a part disposal of a whole asset (the farm) and therefore we ar elookig at a/a+b?

short on time at the moment but will come back in shortly

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By blok
14th Feb 2014 09:54

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where the asset (farm) is considered to be a single asset then a/a+b should be used to ascertain the base cost of the part disposal.

however, if it can be shown that the barns are not part of the single asset (i.e. - are not integral to the whole farm), then you could use the valuation method for finding the base cost.

 

see  http://www.hmrc.gov.uk/manuals/cgmanual/cg71851.htm

 

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By Mark Franklin
14th Feb 2014 11:33

Thanks very much for taking the time to answer blok. 

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By tebthereb
14th Feb 2014 21:03

Any argument that the barns were at some point within the curtilage of the main residence? I doubt it really. I was just reading this:

http://www.taxation.co.uk/taxation/articles/2005/05/12/3171/replies-quer...

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