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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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I am the leaseholder of a flat in EC1. Islington Council want

Resolved Question:

I am the leaseholder of a flat in EC1. Islington Council want to development the block of flats and have made an offer. This offer does not take account of any CGT and will reduce the final settlement considerably. Should I not accept the Council's offer then they will seek a Compulsory Purchase Order, which is when I have been told, CGT will still be due but a rollover would be permitted within a stipulated timescale. Is this rollover facility not available until a CPO is implemented, and should I request written confirmation from HMRC before I make a decision.
Pamela Khan (Mrs)
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise if this property is your main residence and you live at the property address?

Who has advised you of roll-over relief?

Many thanks
Customer: replied 2 years ago.

Flat is not my main residence and I do not live on the property.

It is a Buy to Let and the roll-over relief was reported to me from a CPO chartered surveyor and I read about it from HMRC web site.

Expert:  taxadvisor.uk replied 2 years ago.
Pamela, thank you for your prompt reply.

Rollover relief is available if the taxpayer (you as the leaseholder) is forced to dispose of land under compulsory purchase order and is able to satify the requirements of the legislation.

More information on this can be found here

http://www.taxation.co.uk/taxation/articles/2006/09/07/4364/looking-relief


It would be recommended to get HMRC written confirmation to safeguard yourself.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

I understand that if a CPO is instigated that rollover comes into play. My question was if to all intents and purposes a CPO at present is not in place is the rollover facility available?

Expert:  taxadvisor.uk replied 2 years ago.
Pamela, thank you for your reply.

Normally, rollover relief would be available(called Business asset roll-over relief) if you were disposing one asset to buy another asset for business use.

In my opinion, if you were to dispose of the leasehold without the instigation of a CPO, then roll-over relief will not be available as you are not deemed to carry on a business to qualify for it.

More information on this and examples where business roll-over relief may be available are covered here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323714/hs290.pdf


I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Am I not disposing of a business asset (i.e BTL property) and buying another BTL?

Expert:  taxadvisor.uk replied 2 years ago.
Pamela, property income from residential properties is not deemed inome from a trade in the eyes of HMRC. That's why when you complete your tax return and report profit from property, you show it under supplementary pages SA105 (UK property income) and not under SA103 (self employment - income from trade).

I hope this is helpful.
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Expert:  taxadvisor.uk replied 2 years ago.
I thank you accepting my answer.

Best wishes.