Taxation of Chargeable Gains Act 1992 section 156A

Cessation of trade by limited liability partnership

Section 156A deals with what happens to rolled-over or deferred capital gains held by members of a limited liability partnership when the LLP ceases to be treated as a transparent partnership for capital gains tax purposes.

• When an LLP ceases to trade (meaning it is no longer treated as a tax-transparent partnership), any capital gains that members had previously deferred through rollover relief are triggered immediately before that cessation
• If a member holds an asset or share of an asset whose acquisition cost was reduced under rollover relief (because an earlier gain was rolled into it), a chargeable gain equal to the amount of that reduction is deemed to arise immediately before the LLP stops being treated as a partnership
• If a gain was deferred because it was rolled into a depreciating asset and had not yet come back into charge, that deferred gain is also treated as accruing immediately before the cessation
• For non-corporate members, gains arising under this section before 6 April 2008 did not qualify for taper relief