A. Yes, it is not necessary to establish a direct link between the disposal proceeds and their application, provided that replacement asset or assets are acquired within the normal time limits of 12 months before, or 36 months following the disposal (see HMRC capital gains manual, paragraph CG60760, although note the exception to this rule where an extension to the limit for reinvestment is requested by the taxpayer under Section 152 (3) TCGA 1992). Provided the new asset is purchased within the statutory time limit the disposal consideration may be regarded as having been applied in acquiring the new qualifying asset. In practical terms it would be unfair to expect a direct link between the disposal proceeds and the new acquisition to be shown and in fact, where the acquisition of the new asset precedes the disposal of the old one, it would not be possible to meet this condition if the legislation were interpreted too narrowly.
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