Clearance stampede ahead of CGT change
Latest figures from HMRC show a rush to sell businesses before the 6 April deadline
Extra resources: HMRC
It was no secret that business owners and entrepreneurs were busy
endeavouring to hit the 6 April deadline to sell their businesses.
New HM Revenue &
Customs figures show how frenzied the rush was. The numbers show that in the
last quarter of the 2007/08 tax year applications for capital gains tax
clearances for complicated arrangements surged to 3,022, compared with 1,925 for
the same period in 2006/07 a 57% increase.
Although private equity experts maintain the hike in CGT from 10% to 18% was
not affecting deal behaviour it’s clear the new rules focussed some minds.
Overall, there were 9,203 clearance applications for the tax year just
finished, compared with 7,793 in 2006/07 and 7,278 in 2005/06.
Businesses will not be able to use the spike in applications as an excuse for
not having schemes cleared, however, since the tax office turned round paperwork
in an average of eight days.
Extra resources were deployed to ensure that tax officials were well within
the 30 days allowed for processing applications, according to HMRC.
Clearances are used for complicated CGT plans which can involve tax of up to
£20m.