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Historic roll over relief

Client has disposed of a business asset. I'm preparing the CGT computation. Asset bought in the 1980s. Client has kept some correspondence from the period which reveals the business asset was financed from the sale of another business asset. Was roll-over relief claimed on the sale of the original asset into the replacement asset? Client cannot remember. I have acted for the client for several years. My professional clearance letter to the former accountant asked for details of claims and elections in force. The former accountant had no details. Does this mean the client didn't make a roll-over relief claim or is it the former accountant forgot/doesn't have details?

In the good old days details of claims and elections would be on the paper files held in the local Inland Revenue office. They've all gone. Would HMRC still have detials of historic claims and elections on their digital files? I suspect they don't. I'm relucant to ask in case it causes HMRC to start snooping, but I'm also reluctant to submit a Return ignoring roll-over because it might be wrong and there's a risk of an enquiry. What would you do?

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19th Jan 2019 09:46

I suspect they do.

There's certainly no problem finding out what a client's transitional relief is, going back 20+ years.

It's not unreasonable for you to ask. You weren't acting for the client at the relevant time. Why should you be concerned about HMRC snooping ?

If they don't have a record and you don't have a record and the previous accountant doesn't have a record, I think you can rest easy that there was no claim.

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By Matrix
19th Jan 2019 09:53

I had something similar a few years ago. However it was the disposal of shares and we assumed that holdover relief had been claimed so used nominal value of shares as base cost (from Companies House).

This led to a higher gain and I advised that if either holdover relief wasn’t claimed or they had the March 1982 values then we could reduce the gain and amend. I never heard back.

The only info I held led to the maximum gain so was easier for me, yours could potentially lead to a lower gain.

So you have the original cost but you don’t have the rolled over gain (if any). You would need to look at the interaction of rollover relief and March 1982 rebasing but you can’t if you don’t have this info.

I would probably discuss with the client and either ask HMRC or the previous accountants or put in writing that, since you did not receive details of rollover relief from the previous accountants and he has not provided details, then you will compute the gain on the information you hold. But advise client that if HMRC have records of a rolled over gain then the gain could be higher.

However I personally would call HMRC to cover yourself now that you have picked this up, they gave me overlap relief over the phone once from 20 years ago so you never know.

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