Reinvestment relief: computation: interaction with CG roll-over relief: circumstances where roll-over relief no longer available
TCGA92/S156ZA - S156ZB
Restriction of roll-over relief
As explained in CIRD20050, CG on the disposal of goodwillor intangible assets on or after 1 April 2002 may qualify for reinvestment relief under CTA09/PART8 by reference to expenditure on assets within CTA09/PART 8.
The counterpart to this is that for the purposes of CT CG roll-over relief ceases to be available:
- to defer gains on the disposal of goodwill (and the various types of agricultural and fishing quota within TCGA92/S155) on or after 1 April 2002 against the acquisition of new assets (tangible or intangible) after that date, and
- to defer gains on the disposal at any time of any asset (tangible or intangible) where the replacement assets qualify as chargeable intangible assets within CTA09/PART 8 (see CIRD20035).
Gains qualifying both for roll-over relief and CTA09/PART 8 reinvestment relief
A capital gain arising on the disposal of goodwill or the various types of qualifying quota on or after 1 April 2002 can therefore attract:
- CG roll-over relief by virtue of the acquisition of new assets (tangible or intangible) before 1 April 2002 in the normal way; the requirement that the acquisition should normally be made within the 12 months before the disposal means that only disposals on or before the end of March 2003 can qualify,
- reinvestment relief under CTA09/PART 8 by virtue of the acquisition of the replacement assets qualifying as chargeable intangible assets within CTA09 PART 8 (see CIRD20035).
Such a capital gain can be deferred partly by virtue of the acquisition of new assets within the CG roll-over relief rules and partly by virtue of expenditure on chargeable intangible assets. See CIRD20290. Relief is only available once, whether the taxpayer opts for rollover relief, reinvestment relief or a mixture ofthe two.
Goodwill and intangible assets acquired on or after 1 April 2002 which are not ‘chargeable intangible assets’
Some goodwill or qualifying quota acquired by a company on or after 1 April 2002 will not be a chargeable intangible asset (see CIRD20035) in the company’s hands, normally because the asset was in existence prior to 1 April 2002 and the vendor is a ‘related party’ (CIRD45105) thereby failing the ‘FA02 rule’ (CIRD11500).
- reinvestment in these assets can be used in CG roll-over relief claims on the disposal of any asset within TCGA92/S155 before 1 April 2002 and on the disposal afterwards of those assets which continue to qualify, such as land and buildings, but
- there are no exceptions to the rule that the disposal of goodwill or intangible assets, that would be within CTA09/PART 8 but for the FA02 rule, on or after 1 April 2002 ceases to attract CG roll-over relief; so gains on these disposals cannot be rolled over under the CG code by virtue of reinvestment in the assets referred to in the heading above, even though such a reinvestment cannot be used in a reinvestment relief claim within CTA09/PART 8 either.
Flowchart and table
There is a flowchart in CIRD20280 and a table in CIRD20285 summarising the main points outlined above.