HMRC is reaching out to taxpayers who have made provisional claims for Business Asset Roll-Over Relief (ROR) but have not yet finalised these claims.

If you have sold a business asset, you may be eligible to defer capital gains tax (CGT) by purchasing a qualifying replacement asset within a specified timeframe. Initially, you can make a provisional claim if you intend to purchase a qualifying asset but haven’t done so by the time of your ROR claim. This provisional claim must be updated with a valid claim once the qualifying asset is acquired.

Currently, HMRC is contacting taxpayers who made provisional ROR claims for the sale of assets in the 2020/21 tax year and have yet to replace them with valid claims. The deadline to submit a valid claim is 31 January 2025. Failure to do so will result in HMRC withdrawing the provisional claim, making the deferred CGT payable.

Recommended Actions by HMRC regarding ROR Claims:

  1. For those who have purchased or will purchase a qualifying asset by 31 January 2025:
    • Complete form HS290 for the 2020/21 tax year.
    • If unable to use the form, respond to the HMRC letter with the requested information.
  2. For those who have not purchased a qualifying asset and do not intend to do so by 31 January 2025:
    • Contact HMRC immediately to withdraw the provisional claim.
    • HMRC will issue an assessment for any owed tax and interest, with prompt action helping to minimise interest charges.

Potential Extensions and Future Notices

HMRC may consider extending the period for acquiring a qualifying asset under certain conditions, detailed in their correspondence. Any claims submitted after the 31 January 2025 deadline will be reviewed individually.

Additionally, later this year, HMRC will notify taxpayers who need to replace provisional claims for the 2021/22 tax year. The deadline for these valid claims is 31 January 2026.

For further details, please contact us directly.

Please note that all information in this article should be considered general and not advice from the K2 Accountancy Group.