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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Intangible regime: IP reform: changes to roll-over relief for companies: examples

Example 1

X Ltd and Mr A trade in partnership equally. On 1 October 2001, the partnership disposed of a factory which they had occupied as well as used only for the purposes of the trade for a net consideration of £100,000, making a chargeable gain of £30,000.

On 1 May 2002, the partnership acquired goodwill from an unrelated company for a consideration of £120,000.

Mr A is able to roll-over his £15,000 gain into the acquisition of the goodwill. X Ltd is unable to roll-over its £15,000 gain unless it acquires other assets which are not goodwill or quota.

This applies to all acquisitions of assets within the Intangibles Regime, for example goodwill or quota acquired from an unrelated party on or after 1 April 2002 regardless of when the disposal of the old assets occurred.

Example 2

X Ltd and Mr A carry on a farming trade in partnership equally. On 1 May 2002, the partnership disposed of milk quota for a net consideration of £100,000, making a chargeable gain of £30,000.

On 1 June 2002, the partnership acquired potato quota from an unrelated individual for a consideration of £120,000.

Mr A is able to roll-over his £15,000 gain into the acquisition of the potato quota. Both the disposal and acquisition by X Ltd fall in the period during the IP regime, but as the old asset was within the CG regime the gain could be rolled over into a qualifying asset so long as the qualifying asset was not within the Intangibles regime. In this scenario it cannot be rolled into the acquisition of the potato quota as this is within the Intangibles regime and X Ltd would be liable to a chargeable gain.

Example 3

X Ltd and Mr A carry on a fishing trade in partnership equally. On 1 May 2002, the partners disposed of surplus fish quota for a net consideration of £100,000. X Ltd and Mr A made a chargeable gain of £15,000 each.

On 1 October 2001, the partners acquired a fish processing factory and goodwill for a consideration of £120,000, again on an equal basis.

Mr A and X Ltd are both able to claim roll-over relief on their £15,000 gain into the acquisition of the fish processing factory and the goodwill because the acquisitions took place before 1 April 2002.