CGT versus Entrepeuneurs relief
Many thanks
Comments
-
Time only allows a brief reply, without statutory references...
A February 2013 disposal - are you only now doing the 2012/13 Tax Return?
Take a step back:
1) Has the asset ever qualified for capital allowances (regardless of whether they were claimed)?
2) If not, is it a wasting chattel? If so, it will be exempt from CGT.
3) if the answer to (1) was yes or (2) no, ER will only apply to "material disposals of business assets". Where the existing trade is continuing it would be quite unlikely for the disposal of a single business asset to qualify.0 -
Disposal proceeds deducted from the capital allowance pool are restricted to the original cost of the asset: CAA 2001 s.62(3).WHA said:
You also need to carefully think about whether CGT is even in play here. If capital allowances have been claimed on the boats, then the proceeds of the sale of one will be applied to the capital allowances computation and subject to IT/NIC instead of CGT.
Subject to exemptions, any proceeds in excess of the asset's original cost will be assessed to CGT in the normal way.
0 -
Sorry for being pedantic, but...WHA said:ER is only available when "a business" is sold, not an asset within that business. If your client sold off, say, half the boats as a separate stand alone business, it would be CGT and ER applying, but as they've only sold a single boat, I can't see that ER would be granted here.
It's a similar scenario to a case with a farmer. The farmer sold a field, but it did not qualify for ER because it wasn't a "business" in itself. Compare that with another farmer who sold a couple of fields and a milking parlour, which did qualify because it was a "business" capable of being operated as a business, not just an asset.
Strictly, ER doesn't apply soley to the sale of "a business". It applies to qualifying business disposals, which as defined by s169H(2) of TCGA 1992 are:
a) a material disposal of business assets (per my original post);
b) a disposal of trust business assets; and
c) a disposal associated with a relevant material disposal.
While accept that your 'one field' example will usually hold true, it is not ALWAYS the case. Believe it or not, I have recently secured ER for a farming client on the disposal of a single field - I won't give any more details... that's what my clients pay for!
1
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 323 NEW! Qualifications 2022
- 165 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 88 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership