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Associated disposals and ER - Am I going mad?

Associated disposals for ER - time limits following cessation

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Is it a simple case that if a business ceases (assuming the other criteria are met), you have 36 months in which to sell the business property for it to qualify for ER, and you can do whatever you like with that property following cessation and still qualify for ER? It seems so from the guidance I've just read.

However I would have sworn that there was a quirk added a year or so ago that meant that you would only get 12 months to sell the property instead of the 36 if some particular event happened. Something along the lines of if there was a change in use of the property following the cessation of the trade.

I'm probaly just losing the plot, but would appreciate it if someone could put me out of my misery and let me know if my confusion is credible, or just imagined.

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By Rebecca Cave
03rd Aug 2017 13:52

There was a change added from June 2016 to associated disposals. Where the associated disposal is an asset which was acquired on or after 13 June 2016, it must have been owned by the shareholder throughout a three-year period ending with the date of disposal (TCGA 1992, s 169K(4A)).
There has always been a rule that the asset must have been used for the purpose of the business for at least one year to the date of disposal of the shares, or to the date of cessation of the company’s business if earlier (TCGA 1992, s 169K(4)).

There are HMRC guidelines (not law) aboutthe time between the ceasation of the business and the date of the associated disposal.
The disposal may be an associated disposal if the disposal occurs:
● within one year of the cessation of business;
● within three years of the cessation of business and the asset has not been leased or used for any other purpose at any time after business ceased; or
● where the business has not ceased, within three years of the material disposal, provided the asset has not been used for any purpose other than that of the business.

Most of this answer is taken from the Bloomsbury Tax core annual: Capital Gains Tax 2017/18.

Thanks (3)
Replying to Rebecca Cave:
By TheLambtonWorm
03rd Aug 2017 14:10

Thanks Rebecca - so I'm not going mad at least!

I just couldn't find any reference to the "not used for any other purpose" in the current guidance so was beginning to think I imagined it.

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Replying to Rebecca Cave:
By TheLambtonWorm
03rd Aug 2017 14:12

Following from what you said I've found HMRC's interpretation at CG63998

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