Too good to be true?

We all know that an asset used in a business qualifies for capital gains tax entrepreneurs’ relief (assuming that all the other conditions are satisfied) if it has been used in the trade for at least a year.

My query concerns the position when an asset has been owned for a much longer period but is only brought into use for a trade in the last year of ownership. I have had this query a couple of times in the past few months and would appreciate others’ opinions.

Let’s say that a client has owned a piece of land or shop for nine years and it has not been used for trading purposes. If the client were to carry on a trade from that land or shop for a year (and if all of the other criteria are met) can he potentially pay 10% capital gains tax on the...