Taper relief on property used for business

[Charlie Owen]

I have a client who jointly owned a property with his wife which they rented out to their trading company. They held the property for 2 years and rented it out to the trading company for 2 years so ordinarily, full business taper would apply.

However, once the company stopped using the property, it took approximately 6 months to sell during which time it was unused.

Does anyone know whether this last period would be treated as non-business and if so, any references to any statute which may be relevant?

Thanks

[kevin9]

The property is classed as a non-business asset for the last 6 months prior to sale during which it was unused by the company. However taper relief is based on whole years and so the last 6 months is unlikely to affect the taper relief available. See TCGA1992 Sch A1 para 3. Hope this helps.

[Instinctive]

If the last 6 months is considered non-business use, does this not make it a mixed-use asset for taper relief purposes, meaning part of the gain attracts business asset taper relief and part non-business asset taper relief?

[Charlie Owen]

I agree Instinctive, that was what my understanding of the situation was. However, I thought it seemed a little harsh for the Revenue to strictly call the last 6 months non-business and hence taint the taper when all the client was trying to do was sell the property.

[Instinctive]

To be honest, I haven't researched this to see whether there is a time limit during which the business use is deemed to have continued during the last 6 months for taper relief purposes.

It may be that although the business stopped using the property, it was still held by the the company under an informal lease and from which they were released only upon sale. I recall something similar in respect of premises which become surplus to requirements but am unsure without researching to see if this extends to taper relief.

Ramnik