Reinvestment relief: general matters and conditions to be satisfied: comparison with CG roll-over relief
Points of similarity and difference
Reinvestment relief is similar in some respects to CG roll-over relief on the disposal of goodwill or certain types of agricultural and fishing quota (CG60250 onwards). But there are also important differences.
Main points of similarity
- both reliefs work by calculating an amount which reduces both the gain on the old asset and the reinvestment,
- the proceeds from the sale of one asset can be reinvested in more than one replacement asset,
- there is no requirement that the proceeds from the sale have to be tracked (through bank accounts etc) to the expenditure on the replacement assets,
- the period allowed for reinvestment is similar,
- partial relief is possible if the proceeds are not fully reinvested,
- reinvestment by another member of the same group is treated as reinvestment by the company whose profit is to be deferred,
- the procedural rules regarding provisional claims are similar.
Main points of difference
Under the reinvestment relief rules:
- the relief applies to the realisation of goodwill and all intangible assets within CTA09/PART8 (not just goodwill and certain types of quota),
- reinvestment in other (tangible) assets which currently qualify for CG roll-over purposes does not qualify,
- the assets do not have to be used for the purposes of a trade,
- profits on realisation cannot be rolled over to the extent that they represent the recovery of tax deductions for sums written off a capitalised asset,
- profits rolled over are clawed back by restricting similar deductions for sums written off the new asset,
- profits on the part realisation of an asset cannot be rolled over if the person acquiring the interest in the asset is a ‘related party’,
- in limited circumstances relief is possible where the reinvestment is in the shares of another company and that company has an interest in assets within CTA09/PART8.