Replies to Queries — 4
Dissolution disaster
Mr A and Mr B were in partnership running a takeaway business for many years. Following the dissolution of partnership in May 1997, Mr B continued to trade as a sole proprietor.
In April 2003, Mr A sold his 50% share of the business to Mr B for £42,000 (goodwill sold for £41,999 and £1 for the lease).
Replies to Queries — 4
Dissolution disaster
Mr A and Mr B were in partnership running a takeaway business for many years. Following the dissolution of partnership in May 1997, Mr B continued to trade as a sole proprietor.
In April 2003, Mr A sold his 50% share of the business to Mr B for £42,000 (goodwill sold for £41,999 and £1 for the lease).
Between May 1997 and April 2003, Mr A still had to be consulted on various matters relating to the business (such as the disposal of capital items) and the business insurance remained in joint names.
I have claimed business asset taper relief of 75% on the capital gains of £42,000. The Inspector says that as the client ceased to be a partner in the business in May 1997, business asset taper relief is therefore inappropriate to the disposal in April 2003. He has amended the taper relief to 20%, with which I strongly disagree.
Readers' comments on this scenario are welcomed, together with any thoughts on whether the position would be different if Mr A had still received a fixed income from the business, for example to reflect his capital involvement in it. Is a 'sleeping partner' entitled to the CGT business asset taper relief?
(Query T16,531)
