A taxpayer may be able to claim ROR on the sale of a business asset if they buy a qualifying asset within a set period. The claim allows them to defer paying capital gains tax (CGT) on the sale of the business asset. The taxpayer can make a provisional claim if they intend to buy a qualifying asset but have not done so by the time they need to claim ROR. They must replace the provisional claim with a valid claim once they buy the qualifying asset.
HMRC is writing to taxpayers who made a provisional claim for ROR on the sale of an asset in 2020/21, and have not yet replaced the provisional claim with a valid claim. The time limit for making a valid claim is 31 January 2025. If a valid claim isn’t made before the deadline, HMRC will withdraw the provisional claim and the deferred CGT will become payable.
HMRC recommends that taxpayers take the following action:
- if they have bought a qualifying asset, or will buy one on or before 31 January 2025, they should let HMRC know by completing form HS290 for 2020/21. However, if they can’t use the form, they should reply to the letter and provide all of the information requested in the letter; and
- if they have not bought a qualifying asset and do not intend to submit a valid claim by 31 January 2025, they should contact HMRC now. HMRC will then withdraw the provisional claim and send the taxpayer an assessment for any tax and interest they owe. Acting quickly will reduce the amount of interest payable.
HMRC may consider extending the period during which the taxpayer must acquire the qualifying asset. The conditions for this are set out in HMRC’s letter. HMRC will consider any claims made after 31 January 2025 on a case-by-case basis.
Later in the year, HMRC will write to taxpayers who are yet to replace a provisional claim for 2021/22 with a valid claim. The time limit for making a valid claim for 2021/22 is 31 January 2026.
For further information, see ICAEW’s webpage for CGT. This includes links to guidance in Bloomsbury Professional's comprehensive online library, which is free to view for eligible firms.
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