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HMRC internal manual

Capital Gains Manual

Roll-over relief: other assets

TCGA92/S152 (1)

It is a condition of relief that the consideration for disposal of the old assets must be applied in acquiring other assets or an interest in other assets. No relief is due, therefore, where there is a deemed disposal and reacquisition of the same assets (for example in accordance with TCGA92/S72 (1)).

ESC/D16

Extra Statutory Concession D16

By concession, no objection should be raised to a claim involving the disposal of a trade or a trade asset if the trader, within normal time limits, reacquires the same asset for purely commercial reasons, see also CG53510+ and CG13070. This concessional treatment may be applied also to partnership changes which result in reacquisition of fractional shares in partnership assets.

Avoidance

If, however, a disposal and reacquisition appears to have been carried out for avoidance purposes, no concession should be allowed. Note that the preface to Booklet IR1 states that

“A concession will not be given in any case where an attempt is made to use it for tax avoidance.”)

A common area of difficulty is where a tenant acquires the freehold interest in the land occupied under the tenancy, merges the two interests and then sells off part of the freehold land to finance the purchase. To the extent that the transaction is not an adventure in the nature of trade, see CG69200+ and BIM51620, the capital gain on the disposal of the freehold land cannot be rolled over into the cost of acquisition of the freehold interest in the same land. This is because there has not been the acquisition of an interest in `other assets’ (that is a different physical asset). For guidance on whether an area of land comprises more than one asset, see CG71803+.