Kitten is the controlling shareholder in Kat Ltd, an unquoted trading company.

Kat Ltd
Kat Ltd sold a freehold factory on 31 May 2015 for £364,000, which resulted in a chargeable gain of £120,700. The factory was purchased on 1 October 2003 for £138,600, and further capital improvements were immediately made at a cost of £23,400 during the month of purchase. Further improvements to the factory were made during the month of disposal. The relevant retail prices indexes (RPIs) are as follows:

October 2003      182·6
May 2015            258·0

Kat Ltd is unsure how to reinvest the proceeds from the sale of the factory. The company is considering either purchasing a freehold warehouse for £272,000, or acquiring a leasehold office building on a 40-year lease for a premium of £370,000. If either reinvestment is made, it will take place on 30 September 2016.

All of the above buildings have been, or will be, used for the purposes of Kat Ltd’s trade.

If Kat Ltd decides to acquire the leasehold office building and makes a claim to hold over the chargeable gain on the factory under the rollover relief rules, what is the latest date by which the held-over gain will crystallise?

A Ten years from 31 May 2015
B The date when the office building is sold
C 40 years from 30 September 2016
D Ten years from 30 September 2016