A right to bring an action to enforce a claim is an asset for capital gains tax purposes, provided the claim is not frivolous or vexatious and the right can be turned to account by negotiating a compromise yielding a substantial capital sum1. Any sum paid to compromise the action is treated as derived from the right of action rather than from any underlying property in respect of which the right arose2. The receipt of such a sum accordingly constitutes a disposal3. The asset constituted by the right of action is acquired when the cause of action arises4.
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