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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Roll-over relief: declaration of intention to reinvest: relevant day examples

If you raise an assessment because the relevant day has passed without a reinvestment taking place you may be asked to accept a postponement application on the basis that reinvestment will take place shortly. SUCH APPLICATIONS SHOULD ALWAYS BE DENIED.

By the relevant day the normal three year reinvestment time limit in TCGA92/S152 (3) will have long passed, see CG60620. Claims to relief can only be accepted in these circumstances by the exercise of the Board’s discretion, see CG60640. The Board will not exercise it’s discretion in advance of a reinvestment, see CG60640. The claimant cannot rely on the exercise of that discretion and so cannot request postponement on the basis of that discretion being exercised. You should not appear to prejudice the exercise of that discretion by agreeing to a postponement.

Example 1

An individual disposes of an asset in June 2004 for £250,000, making a gain of £100,000. In his Return for 2004-05 he makes a declaration that he intends to reinvest the whole of the consideration in new assets for the purpose of a claim to roll-over relief.

No tax is paid on 31 January 2006 on the gain of £100,000. The relevant day is 31 January 2009. No valid claim to roll-over relief has been made by that date. You should raise an assessment to recover the tax on the gain together with interest from 31 January 2006.

Example 2

An individual disposes of an asset in September 2004 for £180,000, making a gain of £60,000. She makes a declaration in her Return for 2004-05 that she intends to reinvest £160,000 in new assets for the purpose of a claim to roll-over relief.

She will pay tax on 31 January 2006 on a gain of £20,000 (the gain that is not to be reinvested). The relevant day is 31 January 2009. In August 2007 she submits a valid claim to roll-over relief on new assets costing £150,000 and says that she no longer wishes to reinvest any greater amount. You should raise an assessment to recover tax on a gain of £10,000 together with interest from 31 January 2006.