Taxation of the unincorporated business (for P6 (UK)) - part 4: self-test

Test your understanding

(1). State whether the following statements are true or false in respect of the sale of a business including a one-year old building and plant and machinery by an unincorporated trader to a company that he controls.

A There is no requirement to charge VAT if the sale qualifies as a transfer of a going concern.
B There will not be any capital allowances balancing adjustments because the trader and the company are connected persons.

(2). Baxter sold the whole of his business as a going concern to Campbell Ltd for £920,000. The chargeable gains on the assets sold were £280,000. The consideration consisted of shares in Campbell Ltd worth £700,000 and £220,000 in cash. The conditions for both incorporation relief and entrepreneurs’ relief were satisfied.

What is Baxter’s base cost in the shares acquired?

. Warhol has been employed by WG Ltd for many years. On 1 June 2017 he sold 4,000 shares in WG Ltd realising a chargeable gain of £38,000. Entrepreneurs’ relief was not available in respect of this gain.

Identify three possible reasons for the non-availability of entrepreneurs’ relief.