business asset roll over relief

Dear Sir/Madam, good afternoon. we have a client who is sole trader in catering business and he is selling his business (non-vat registered) as a going concern (lease, goodwill, etc are all under his own name). purchase price was GBP 30K. sales price is going to be GBP 55K. he is going to use this money to purchase another shop also in catering business. but he plans to set up a limited company and use the LTD to purchase the new shop(lease etc). can we plz ask if he still qualifies the business asset rollover relief if everything else is satified? thank you for your help. Kind regards  

Name removed admin .

Hi L T,
Please see guidance here regarding qualifying conditions for Business Asset Rollover Relief:
Capital Gains Manual/cg60270
and
Capital Gains Manual/cg60260
However, guidance on the transfer of a business to a Ltd company can be found here:
Incorporation Relief (Self Assessment helpsheet HS276)
and
Capital Gains Manual/cg65700
and
Capital Gains Manual/cg65700c
Thank you.

Thank you for you reply, the manual links you sent does not clarify the situation. as we perfectly know that a sole trader can get this roll over relief if he sells old asset, made a gain and re-invests it in new asset and continues to trader as sole trader, which is a typical example of business asset roll over relief. our question is that the sole trader made a gain from sole- trader business. with the sales, he wishes to use the money to do business via limited company, is roll over relief applicable to this plz? thank you so much. Regards

Hi L T,
If none of the conditions are met for roll-over relief, based on the guidance provided and you are transferring the business into a Ltd company then incorporation relief may be more suitable.
As each case is taken on an individual basis, if the guidance provided still does not answer your query then please do not hesitate to contact us direct to discuss in more detail.  
Thank you. 

Dear HMRC Admin 25, Thank you for your kind reply. It's highly appreciated. as what we had explicitly pointed out, we don't think that we are talking about incorporation relief, 1, he is selling the business as a sole trader and there is a gain; 2, if he use the gain to purchase another shop and continue to trade in the same business as sole trader, we can be certain that roll over relief is applicable. 3, what the guidance is not clear is that , he is now using the gain from the sale to set up a new LTD and it's the LTD that is purchasing the new shop, we just want to confirm if roll over relief is applicable to his gain under this circumstances. he is not transferring his sole trader business directly to LTD in exchange of shares, so incorporation relief is not applicable to this case, Please can you clarify? Kind regards 

Name removed admin .

Hi ,
 

If the guidance already provided does not answer your query, you will need to contact us direct on 0300 200 3310 . Thank you  .

Thank you for your message. Regards LT