In 1988 A sold his goodwill to J . He invested the proceeds of the sale in a flat in the south of England, which he used for as a base to work from on behalf of J, who were his new employers, servicing the southern clients on their behalf. He successfully claimed roll over relief against the flat, making it new asset 1.
In 1992 he purchased his goodwill back from J, at a discount, and used the flat as a base for his re-acquired business as a sole trader. In 2001 he incorporated as A Ltd. He had let the flat to strangers from 2000, but in June 2001 it was used to serve A Ltd, and sold in 2002.
With the proceeds of the flat (New Assets 1) he bought a private residence, and used 1/3 of this to service all the clients of A Ltd. The gain on New assets 1 was partly rolled over on this 1/3, (use of home as an office) so that it became New Assets 2. The rest of the gain was covered by taper relief.
It was disclosed to HMRC that A Ltd paid rent to A and his wife, and the was declared on their SATR's. Also stated was the fact that the entire property was forthe first 3 months wholly and exclusively used for A Ltd, after which (when A and his wife moved in, having sold their previous PPR) and that ," one third was predominantly but not exclusively used as a working space. "
A retired at the end of 2010. About a year later A Ltd was wound up and struck off, as soon as it had sold the goodwill.
A owns the house as joint tenant with his wife. It is suggested recently that for family reasons a family member should be made a third joint tenant.
Here are my questions:
1. If they did that, should New Assets 2 be treated as disposed of at market value for cgt, with the new assets as base cost net of the rolled over gain, and the notional consideration being 1/3 of 1/2 of the market value?
2. Or should A be deemed to have disposed of New Assets 2 (the "office") at market value when he retired in 2010-2011 and made New Assets 2 part of his PPR (in which case there may need to be an amendment to his SATR 2010-2011)? and
3. Does it make a difference to the roll-over position that A charged rent to A Ltd on New assets 2 ?
Comments on these points would be appreciated.