CIRD20270 - Reinvestment relief: computation:
interaction with CG roll-over relief: circumstances where roll-over
relief no longer available
FA02/SCH29/PARA132 (1) and (5)
Restriction of roll-over relief
As explained in
CIRD20050, CG on the disposal of
goodwill or intangible assets on or after 1 April 2002 may qualify
for reinvestment relief under Schedule 29 by reference to
expenditure on assets within Schedule 29.
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 Schedule 29 (see
CIRD20035).
Gains qualifying both for roll-over relief and Schedule 29
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 Schedule 29 by
virtue of the acquisition of the replacement assets qualifying as
chargeable intangible assets within Schedule 29 (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 of the 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
‘time test’ (
CIRD11500).
Note that:
- 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
Schedule 29 but for the time test, 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
Schedule 29 either.
Flowchart and table
There is a flowchart in
CIRD20280 and a table in
CIRD20285 summarising the main points
outlined above.
