Mark McLaughlin highlights a potential trap for business owners seeking capital gains tax incorporation relief.
HM Revenue and Customs (HMRC) recently commenced a ‘One to Many’ campaign, targeting taxpayers who incorporated property businesses in the tax year 2017/18 but reported no capital gains tax (CGT) liability in their tax returns on the basis that ‘incorporation relief’ applied in full.
That’s a relief
Incorporation relief (TCGA 1992, s 162) is broadly subject to the following requirements:
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A person who is not a company (i.e., a sole trader or individual partner) transfers to a company a business as a going concern;
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The whole assets of the business (or possibly excluding cash) are transferred to the company; and
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The consideration for the
