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MARK MORTON illustrates an anomalous aspect of taper relief in a company winding-up and queries whether a concessionary practice exists.
SINCE TAPER RELIEF was implemented in April 1998, one common problem area has specifically centred on the liquidation of companies. The following example demonstrates the difficulty that arises.
Example
Benson Hotels Ltd has gone into liquidation following a trade and asset sale on the retirement of Benson, the company's controlling shareholder and managing director.
MARK MORTON illustrates an anomalous aspect of taper relief in a company winding-up and queries whether a concessionary practice exists.
SINCE TAPER RELIEF was implemented in April 1998, one common problem area has specifically centred on the liquidation of companies. The following example demonstrates the difficulty that arises.
Example
Benson Hotels Ltd has gone into liquidation following a trade and asset sale on the retirement of Benson, the company's controlling shareholder and managing director.
Benson has owned and run the hotel company since 1983. The company ceased trading on 5 May 2002, and the winding-up was completed on 5 March 2003.
On the assumption that Benson's chargeable gain (before taper relief) resulting from the capital distribution on 5 March 2003 is £500,000, his taper relief position is as follows:
|
Business asset period |
|
|
6 April 1998 to 5 May 2002 |
49 months |
|
Non-business asset period |
|
|
6 May 2002 to 5 March 2003 |
10 months |
