Entrepreneurs relief/ESC16

[shotokan]

I can't seem to get a definitive answer on this one. Wonder if anyone can help.
Client runs a hotel through a ltd co but owns the actual property personally. No rent is paid. He sells the hotel and then applies for the company to be wound up under ESC16. Does the sale of the property qualify for ER under the "associated disposal" rules? The "sale" of shares under ESC16 takes place after the asset sale but it can't really be done the other way round.

All comments are appreciated.

[pawncob]

Sale of property seems to qualify. What makes you think it won't?
See:http://www.hmrc.gov.uk/helpsheets/hs275.pdf

[shotokan]

It's just the fact that, in this case, the sale of the asset takes place BEFORE the "sale" of shares, the withdrawal from the business. The legislation only seems to cover the sale of shares, THEN the associated disposal of the asset (within 3 years).

[AvocadoK]

The legislation doesn't specify that the disposals have to take place in any particular order. The main thrust of the associated disposal rule is that the disposal of the hotel must be made as part of the withdrawal from participation of the business. Provided you wind up the company reasonably promptly after the disposal of the asset, and the other conditions are all met, ER should be due.
AK