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Business Asset Disposal Relief – date of disposal

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A limited company client ceased trading after many years on 31 March 2021. There is one director who has always held 100% of the share capital. He is now retired. Shares are not being sold. Net assets at 31 March 2021 £18,000. DS01 will be submitted shortly. Creditors have been settled. The remaining balance on the bank account is about to be transferred to him.

 What is the disposal date for the BADR claim? The date trading ceased, the date the remaining bank balance is transferred to him or the date that the company is struck off which will be after 5 April 2022?

 Thanks in advance.

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By Tax Dragon
14th Jan 2022 20:20

He has the shares until he doesn't. Going from having them to not having them is a disposal.

Prior to that, he gets a wadge of cash. That's treated as a disposal by virtue of (from memory... ergo wrong based on my recent form in here) s22.

So one shareholding, at least two disposals. Ceasing to trade is not a disposal by the shareholder.

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Replying to Tax Dragon:
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By The Dullard
14th Jan 2022 20:46

Tax Dragon wrote:

Prior to that, he gets a wadge of cash. That's treated as a disposal by virtue of (from memory... ergo wrong based on my recent form in here) s22.

You're only 100 out. It's TCGA 1992, s 122 that applies to capital distributions (which includes distributions within CTA 2010, s 1030A) and such capital distributions are precluded from falling within s 22 by s 22(4)(b).

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Replying to The Dullard:
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By Tax Dragon
14th Jan 2022 21:38

The Dullard wrote:

You're only 100 out.

If you're going to be wrong, be wrong in style.

Why does s122 refer to receipt by a person but s22(4) refer only to receipt by a company? Does that difference have any effect at all?

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Replying to Tax Dragon:
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By The Dullard
14th Jan 2022 22:27

Yes. Good spot. Maybe you were right after all.

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Replying to The Dullard:
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By Tax Dragon
15th Jan 2022 07:05

It seems to me I shouldn't be.

The reference to 'company' in s22 seems designed to confuse. It's succeeded. But it doesn't matter in the slightest in the OP's case. I'm not seeing when it ever would.

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By TheNovice
14th Jan 2022 20:29

DA Baker wrote:

A limited company client ceased trading after many years on 31 March 2021. There is one director who has always held 100% of the share capital. He is now retired. Shares are not being sold. Net assets at 31 March 2021 £18,000. DS01 will be submitted shortly. Creditors have been settled. The remaining balance on the bank account is about to be transferred to him.

 What is the disposal date for the BADR claim? The date trading ceased, the date the remaining bank balance is transferred to him or the date that the company is struck off which will be after 5 April 2022?

 Thanks in advance.

When the funds become distributable which should be noted in the shareholders resolutions.

EDIT: I see Tax Dragon beat me to it

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By Paul Crowley
14th Jan 2022 22:13

IIRC
Our friendly insolvency expert suggests that the dates can be split, but I would expect that presupposes a split of the money movement.

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By DA Baker
15th Jan 2022 13:07

Thanks for the helpful replies. It's much appreciated.

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