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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Partnership mergers: SP D12

On the occasion of a merger of the businesses of two or more partnerships to form a single partnership any reallocations of partners’ fractional interests in the assets of the merged entity will be treated as an acquisition or a disposal arising from a change in partnership sharing ratios.

Paragraph 9 of SP D12 explains that the CG treatment will follow the practice for dealing with changes in partnership sharing ratios described in paragraphs 4, 5 and 6 of SP D12, see CG27500.

Roll-over relief

If a gain arises to a partner on a reduction of his fractional interest in an asset of the pre-merger partnership he may be able to claim roll-over relief under TCGA92/S152 against the acquisition of a fractional interest in an asset of the post-merger partnership subject to the relevant conditions for relief being satisfied.

For the purpose of a roll-over relief claim the trade or profession carried on by the pre-merger partnership will be regarded as being the same as that carried on by the post-merger partnership.

Where the consideration for the acquisition of a fractional interest in an asset of the post-merger partnership is less than the disposal consideration for the fractional interest in an asset of the pre-merger partnership, any roll-over relief due will be subject to restriction under TCGA92/S153.

Further guidance on partnerships and roll-over relief is available at CG61150 onwards.