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A haulage firm has a yard, waste disposal facility and aggregate storage. In the course of trading, noise and dust pollution are caused. Adjacent to the yard, a residential property became available, which the company purchased to prevent any other buyer subsequently complaining about pollution. The property is now let and generates rental income as well as providing security.
A haulage firm has a yard, waste disposal facility and aggregate storage. In the course of trading, noise and dust pollution are caused. Adjacent to the yard, a residential property became available, which the company purchased to prevent any other buyer subsequently complaining about pollution. The property is now let and generates rental income as well as providing security. As the property was not purchased as an investment, but as some form of assurance that the business could continue as before, we should be interested in readers' comments as to the eligibility of such a purchase for rollover relief.
Additionally, the company owns some 50-plus acres of gravel-bearing land. It is likely that planning consents for a reservoir and thus the abstraction of gravel will ensue in the foreseeable future. Adjacent to the site is a residential property which is currently on the market. It is proposed by the company that this property be purchased along similar lines to those mentioned above. The purpose of purchasing the property would be to ensure that no objections were made to any planning applications with regard to the accessibility and the dust and pollution that may arise therefrom. Again, would readers let us have their views as to whether rollover relief applies in this case.
Query T16,644 — Sandy Pit.
Reply by S.W.I.
Rollover relief is available on certain assets used exclusively for the purposes of the company' s trade as per TCGA 1992, s 152. Buildings occupied and used for the purposes of the trade fall within the specified assets list in TCGA 1992, s 155.
However, it is feared that Sandy Pit will have an uphill struggle. Residential property is not normally a qualifying asset for rollover relief. It is a question of fact whether the assets concerned are occupied and used only for the purposes of the trade. In the present case, the properties are not an integral part of the trade; rather they were acquired to avoid possible planning objections. At best, the buildings are ancillary to the company's trade rather than a key component. It is assumed they are let on a commercial basis to an unconnected tenant; if so HMRC's Capital Gains Manual at paragraph CG60994 makes it clear they are unlikely to be qualifying assets.
Sandy Pit should check how the income has been taxed on the company — if it has been taxed under Schedule D, Case I (and full disclosure of the facts has been made on the company's tax returns) he might be able to argue that the assets are qualifying assets.
