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04 March 2008
ALEX HENDERSON and JUDITH WILSON uncover a new trap which could catch out partnerships
KEY POINTS
- HMRC have clarified their treatment of contributions to partnerships.
- Where an asset is transferred to a partnership by means of a capital contribution the partner has made a part disposal.
- The tax position is not clear for earlier transactions.
- Rollover relief will be available in certain circumstances.
HMRC clarified their practice in relation to the capital gains tax treatment of the contribution of assets to a partnership on 21 January 2008 in Revenue & Customs Brief 03/08.
This constituted a significant change in long standing practice by HMRC in this area and is likely to give rise to considerable uncertainty for taxpayers who have entered into transactions on the basis of previously stated HMRC practice but who have not received specific clearance from HMRC.
Many commercial transactions have been undertaken placing reliance...
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