Taxation of the unincorporated business for ATX (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?

(3). Warhol has been employed by WG Ltd for many years. On 1 June 2020 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.