CG60300 - Reliefs: replacement of business assets (roll-over relief): time limit for acquiring the new asset
Statutory time limit
A person must acquire the new assets, or enter into an unconditional contract to acquire them, within one of the following periods:
- 12 months before the disposal of the old assets
- 36 months after disposing of the old assets
(see section 152(3) of the Taxation of Chargeable Gains Act (TCGA) 1992).
Business Asset Roll-over Relief (Self Assessment helpsheet HS290) (GOV.UK) provides an example.
Extending the time limit
If a person acquires the new assets outside the statutory time limit and then makes a claim for relief, section 152(3) TCGA 1992 gives the Board of HMRC (“the Board”) the power to exercise discretion to extend the time allowed for acquiring new assets.
If the Board agrees to extend the time limit, the reinvestment condition will be treated as met.
The Board cannot consider whether to extend the time limit before having the following:
- a valid claim
- evidence that the old asset has been disposed of
- evidence that the new asset has been acquired (that is, reinvestment has been made)
- confirmation that all other conditions for roll-over relief are met
- all relevant facts regarding the delay in reinvestment
This includes the condition that the disposal consideration has been applied in acquiring new assets (see CG60250).
The First-tier Tribunal does not have the power to overturn a Board decision not to extend the time limit.
An extension of the time limit in section 152(3) TCGA 1992is permitted where the claimant can demonstrate that:
- they had a firm intention to acquire replacement assets within the time limit, but
- they were prevented by some fact or circumstance beyond their control from acquiring the replacement assets, or any assets, within the time limit, and
- acted as soon as they reasonably could after ceasing to be so prevented.
It is a question of fact and degree and each case is considered on its own merits. Examples of circumstances outside the claimant's control might include death or serious illness of a vital party at a crucial time, unsettled disputes or litigation, genuine difficulty in establishing good title or in finding suitable replacement assets or delay in receipt of disposal consideration.
A mere change of intention at a late stage or a shortage of funds arising out of application of disposal consideration to some purpose other than the acquisition of new qualifying assets will not normally be regarded as circumstances beyond the claimant's control.
Mandatory submission to Grade 7 Capital Gains Specialist
Only a Grade 7 Capital Gains (CG) Specialist (or, where relevant, a member of the Capital Gains Technical Team) can authorise (or refuse) a request to extend the time limit for reinvestment. Details of the authorised CG specialists (SPOCs) can be found in the section Stage Three - Help within your directorate on the Contacting Us page on the HMRC Capital Gains Network SharePoint site.
Once a caseworker has formed a view on whether the Board can extend the time limit for reinvestment, they must then make a submission to a Grade 7 CG Specialist. The submission should include all of the above information as well as the caseworker’s opinion on whether the extension should be granted.
A Grade 7 CG Specialist may also consider an extension request in the case of land disposed of under a compulsory purchase order or under threat of such an order, provided the conditions set out at Statement of Practice D6 are met.
Mandatory submission to the Capital Gains Technical Team
The Grade 7 CG Specialist (SPOC) must refer the case to the Capital Gains Technical Team (see the Contacting Us page on the HMRC Capital Gains Network SharePoint site) if:
- they consider the extension should be refused, or
- the new asset was acquired more than 3 years before or 6 years after the disposal of the old asset
Provisional relief
A person may obtain provisional relief before the new asset is acquired by making a declaration of intention to reinvest in their tax return (seeCG60310).
If provisional relief ends before the reinvestment happens, the gain becomes chargeable to tax.
The Board’s discretion to extend the reinvestment period does not include extending the period for which provisional relief applies. They cannot use their discretion to stop a gain becoming chargeable simply because provisional relief has expired.
Conditions for extending the time limit
The Board will only consider extending the time limit after both the disposal of the old asset and the acquisition of the new asset have taken place, and when all relevant facts and documents are available.
There is further guidance on when HMRC may accept requests to extend the time limit for reinvestment at Business Asset Roll-over Relief (Self Assessment helpsheet HS290) (GOV.UK).
Compulsory purchase of land followed by a lease-back
As explained in Statement of Practice D6, if land is acquired by compulsory purchase for development and the authority immediately grants the previous owner a lease of the land until construction begins, the Board will extend the time limit for reinvestment to three years after the land stops being used for the purposes of the trade.
This extension depends on the claimant showing that they clearly intended to use the sale proceeds to acquire relevant assets.
Note though that an assessment should be made on the gain on disposal on the earliest of the following occasions:
- as soon as the condition of intention to reinvest in qualifying assets ceases to be satisfied
- when the land ceases to be used for the trade of the claimant, including on death of the trader or complete cessation of the trade
- in good time before the expiry of the relevant assessing time limit