If the only reason for transferring the asset to the trust in the first place is so that the gain can be held over by S (settlor) into the trust and then held over again on a transfer out of the trust to an individual beneficiary (B), HMRC might seek to argue that Ramsay applies and that one should look at the situation in the round and treat it as if the asset has been transferred direct from S to B (in which case s260 TCGA holdover would not be available). Whilst there is no strict time limit on this, if the asset were transferred in and out within two years, I would expect HMRC to look at it very closely.
Paul Davidoff
New Quadrant Partners Ltd