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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Roll-over relief: ownership of assets: general

In considering claims to roll-over relief the question of who is the beneficial owner of the asset sometimes arises, see CG11730. Difficulties may arise if the asset (although clearly used for trade purposes) is not included in the balance sheet or if the trade is carried on in partnership and one partner claims or has taken exclusive legal title to it.

Problems may commonly arise in two situations

  • where the trade is carried on by a partnership consisting of either a husband and wife or of civil partners of each other and there is no partnership agreement and a common capital account;
  • where an asset has been acquired for use by a partnership but there is doubt about the extent of each partner’s interest in it.

Husband and wife or civil partners

It was established in Tod v Mudd (60TC237), that husbands and wives are separate persons for roll-over relief purposes. Similarly, civil partners of each other are also separate persons for roll-over relief purposes. It is necessary, therefore, to identify the interests held by each in the material asset and then to apply the roll-over relief conditions to that interest in that asset. The person who provided the capital for acquisition of the asset is a factor to be taken into account but will not necessarily determine the issue, see CG34400+.

Partnerships

The extent of each partner’s interest in a partnership asset is determined by reference to the guidance at CG27220.

If the asset is not included in the partnership balance sheet or one partner claims beneficial ownership to the exclusion of the others, the question turns on the facts, actions and intentions of the partners, see CG27200. For further guidance on roll-over relief claims made by partners, limited partners or members of limited liability partnerships refer to CG61150+.