HMRC’s latest “One-to-Many” campaign is targeting individuals who have utilised rollover relief for business assets in the tax year 2020/21.
What is Rollover Relief?
Rollover Relief is a method to defer gains from the sale of a qualifying business asset by reinvesting the proceeds into another qualifying business asset.
- This deferral can be either partial or total, offering flexibility in asset replacement.
- The replacement asset doesn’t have to be identical to the original, widening the scope for investment.
- To qualify, the new asset must be purchased within a specified timeframe: one year before and three years following the sale of the original asset.
Provisional Claims: If finding a suitable replacement takes time, a provisional claim can be made at the time of sale. This provisional relief remains valid until a valid claim is made, typically upon acquiring the replacement asset.
- The deadline for valid claims relating to gains from the 2020/21 tax year is 31 January 2025, prompting HMRC’s current outreach efforts.
Expect Correspondence: If you’ve made a provisional claim but haven’t confirmed it with a valid claim, expect a letter from HMRC.
- Action Required: Upon receipt, confirm purchase intentions to HMRC or update them if plans have changed.
Consequences of Non-Confirmation: Failure to confirm may lead to HMRC assessing and recovering deferred tax along with interest, starting from 1 February 2022.
Extension Possibilities: If meeting the deadline is challenging but asset purchase remains on the agenda, HMRC may consider extension requests.
- Conditions Outlined: Details outlining the conditions for such extensions will be provided in the correspondence.
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