Roll Over Relief

[kozmapar]

Is there a minimum period that a replacement asset must be used for the trade to allow a roll over claim? I have a case where the client sold an asset and rolled over the gain by reinvesting in a replacement qualifying asset. However, a couple of years later, the replacement asset is no longer being used for the trade and has become an investment asset.

I can't see any reference to a minimum period that the replacement asset needs to be used for the trade. I was initially thinking the roll over fails and the original gain comes back into charge but now I am not so sure.

[mullet]

There is no minimum period. Time is mentioned in Section 152, but only in terms of the new assets "which on the acquisition are taken into use, and used only, for the purposes of the trade ..."

So it's not a problem that the asset is no longer a business asset. But its current status means that the gain on disposal cannot be rolled into a new asset. And remember that the depressed acquisition consideration which carries the rolled-over gain will remain until the asset is sold. So HMRC will still get the CGT in the end.

[RMC]

In this case the downside of claiming ROR is that the sale of the second asset the will be liable to CGT at full rate, whereas if the trade ceased, without ROR the first gain could be, subject to the usual conditions, taxed at the enterpreneurs’ rate of 10%.