Rollover relief

Rollover relief

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Asset 1 (old asset) is land used in a partnership trade.

Asset 2 (new asset) is goodwill of an entirely differrent business being purchased from an unconnected person.. 

The partner will purchase the goodwill of a new business and continue to be a partner in the old business.

Q1 - Is goodwill a depreciating asset for the purposes of s154?  I would imagine it is but suprisingly can't find anything to confirm.  (life less than 50 years)

What if a newco (the partner would be the sole shareholder) made the purchase of goodwill. 

Q2. would the partner be able to rollover the gain via the company purchase?.  I read in some places that this is OK.  if so how would the intangible regime in CTA interact with this? i.e. would teh fact that this is new goodwill rollover deny rollover relief ?

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By User deleted
28th Jan 2013 15:42

Never the twain ...

A2. Gains realised on disposal of chargeable capital assets cannot be rolled over into purchases of intangibles. In any event, it is the person making the disposal that has to reinvest, so even if the new asset were qualifying, purchase by a different entity, eg newco, would preclude relief.

A1. Unless there is clear evidence that the business will cease within 50 years, goodwill should not be treated as a wasting asset (CG76725).

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Replying to lionofludesch:
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By blok
28th Jan 2013 15:55

.

BKD wrote:

A2. Gains realised on disposal of chargeable capital assets cannot be rolled over into purchases of intangibles.

but goodwill is specifically mentioned in s155 as a qualifying asset? (as are other intangible - fish quota etc)

are you refering to companies?

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By User deleted
28th Jan 2013 16:29

Qualifying assets

Yes goodwill is a qualifying asset, but clearly only if it is a chargeable asset for capital gains purposes. Which it is not in the hands of a company (if it is 'new' goodwill). EDIT - see next paragraph

But I've just re-read things, and my earlier comment (about mixing capital and IFA assets) is nonsense - if a company disposes of what would have been an IFA but is a pre-2002 asset, any gain can indeed be rolled over under the IFA reinvestment provisions.

However, in any event, I'm not sure how you think relief could be given in the second scenario - the person disposing of the first asset is not the person that is investing in the second asset.

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By blok
28th Jan 2013 16:30

.

I was getting myself slightly confused - because the assets could be used in a trade of his personal company and still qualify for relief (i.e. they didn't need to be used in his trade).  but i I now appreciate that the person making the disposal needs to be the same person who is making the purchase.

so - a company selling and buying new goodwill may be entitled to rollover relief, however via the rules contained in CTA 2009 part 8, ch7. agree?

thanks for the cg manual page

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