Mr B operated a hotel business via a company. The hotel property was owned privately by Mr B. Mr B ceased trading of the business on 3 August 2016. The business was then transferred to his son’s new company which began to trade on 4 August 2016. No consideration was given for the transfer of the trade. Mr B then sold his hotel property in May 2019. This feels like an associated disposal and therefore entrepreneurs’ relief applies; however, the disposal of the business in 2016 is not a textbook disposal (i.e. no shares were sold).

Arthur Weller replies:
If Mr B had given away the shares in his trading company, then entrepreneurs’ relief (ER) could have applied because ER also applies to a gift (see HMRC’s Capital Gains manual at www. gov.uk/hmrc-internal-manuals/capital-gainsmanual/cg63955). But in your scenario (if I am not mistaken), it appears that the company gave away its business. If so, ER will not apply, an consequently the associated disposal rules will also not apply.